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BOSTON SAFE DEPOSIT AND TRUST COMPANY,
SELLER
AND
▇▇▇▇▇▇ CAPITAL, A DIVISION OF ▇▇▇▇▇▇ BROTHERS HOLDINGS INC.
PURCHASER
MORTGAGE LOAN SALE, WARRANTIES AND SERVICING AGREEMENT
DATED AS OF JANUARY 1, 1997
ADJUSTABLE RATE MORTGAGE LOANS
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TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . 1
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF MORTGAGE FILES;
BOOKS AND RECORDS; CUSTODIAL AGREEMENT; DELIVERY OF DOCUMENTS
Section 2.01 Sale and Conveyance of Mortgage Loans;
Possession of Mortgage Files; Maintenance
of Servicing Files . . . . . . . . . . . . . . . . 11
Section 2.02 Books and Records; Transfers of Mortgage
Loans . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.03 Additional Pledged Collateral Custodial
Agreement; Delivery of Documents . . . . . . . . . 13
ARTICLE III
REPRESENTATIONS AND WARRANTIES; REMEDIES AND BREACH
Section 3.01 Company Representations and Warranties . . . . . . . 13
Section 3.02 Representations and Warranties Regarding
Individual Mortgage Loans . . . . . . . . . . . . . 16
Section 3.03 Remedies for Breach of Representations
and Warranties . . . . . . . . . . . . . . . . . . 24
Section 3.04 Mortgage Loans Convertible to Fixed
Interest Rate . . . . . . . . . . . . . . . . . . . 26
ARTICLE IV
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 4.01 Company to Act as Servicer . . . . . . . . . . . . . 27
Section 4.02 Liquidation of Mortgage Loans . . . . . . . . . . . . 29
Section 4.03 Collection of Mortgage Loan Payments . . . . . . . . 30
Section 4.04 Establishment of and Deposits to
Custodial Account . . . . . . . . . . . . . . . . . 30
Section 4.05 Permitted Withdrawals From Custodial
Account . . . . . . . . . . . . . . . . . . . . . . 32
Section 4.06 Establishment of and Deposits to
Escrow Account . . . . . . . . . . . . . . . . . . 33
Section 4.07 Permitted Withdrawals From Escrow Account . . . . . . 34
Section 4.08 Maintenance of Tax, Insurance, Other
Charge Records . . . . . . . . . . . . . . . . . . 34
Section 4.09 Protection of Accounts . . . . . . . . . . . . . . . 35
Section 4.10 Maintenance of Hazard Insurance . . . . . . . . . . . 35
Section 4.11 Maintenance of Mortgage Impairment
Insurance . . . . . . . . . . . . . . . . . . . . . 36
Section 4.12 Maintenance of Fidelity Bond and
Errors and Omissions Insurance . . . . . . . . . . 37
Section 4.13 Inspections . . . . . . . . . . . . . . . . . . . . . 37
Section 4.14 Restoration of Mortgaged Property . . . . . . . . . . 37
Section 4.15 Title, Management and Disposition
of REO Property . . . . . . . . . . . . . . . . . . 38
Section 4.16 Real Estate Owned Reports . . . . . . . . . . . . . . 40
Section 4.17 Liquidation Reports . . . . . . . . . . . . . . . . . 40
Section 4.18 Notification of Adjustments . . . . . . . . . . . . . 40
Section 4.19 Reports of Foreclosures and
Abandonments of Mortgaged Property . . . . . . . . 40
ARTICLE V
PAYMENTS TO PURCHASER
Section 5.01 Remittances . . . . . . . . . . . . . . . . . . . . . 41
Section 5.02 Statements to Purchaser . . . . . . . . . . . . . . . 41
Section 5.03 Monthly Advances by Company . . . . . . . . . . . . . 42
ARTICLE VI
GENERAL SERVICING PROCEDURES
Section 6.01 Transfers of Mortgaged Property . . . . . . . . . . 42
Section 6.02 Satisfaction of Mortgages and Release
of Mortgage Files . . . . . . . . . . . . . . . . . 43
Section 6.03 Servicing Compensation . . . . . . . . . . . . . . . 43
Section 6.04 Annual Statement as to Compliance . . . . . . . . . . 44
Section 6.05 Annual Independent Public Accountants'
Servicing Report . . . . . . . . . . . . . . . . . 44
Section 6.06 Right to Examine Company Records . . . . . . . . . . 44
ARTICLE VII
COMPANY TO COOPERATE
Section 7.01 Provision of Information . . . . . . . . . . . . . . 45
Section 7.02 Financial Statements; Servicing
Facilities . . . . . . . . . . . . . . . . . . . . 45
ARTICLE VIII
THE COMPANY
Section 8.01 Third Party Claims . . . . . . . . . . . . . . . . . 46
Section 8.02 Merger or Consolidation of the Company . . . . . . . 46
Section 8.03 Limitation on Liability of Company and
Others . . . . . . . . . . . . . . . . . . . . . . 46
Section 8.04 Limitation on Resignation and
Assignment by Company . . . . . . . . . . . . . . . 47
ARTICLE IX
DEFAULT
Section 9.01 Events of Default . . . . . . . . . . . . . . . . . . 48
Section 9.02 Waiver of Defaults . . . . . . . . . . . . . . . . . 49
ARTICLE X
TERMINATION
Section 10.01 Termination . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01 Successor to Company . . . . . . . . . . . . . . . . 50
Section 11.02 Amendment . . . . . . . . . . . . . . . . . . . . . . 51
Section 11.03 Governing Law . . . . . . . . . . . . . . . . . . . . 52
Section 11.04 Duration of Agreement . . . . . . . . . . . . . . . . 52
Section 11.05 Notices . . . . . . . . . . . . . . . . . . . . . . . 52
Section 11.06 Severability of Provisions . . . . . . . . . . . . . 53
Section 11.07 Relationship of Parties . . . . . . . . . . . . . . . 53
Section 11.08 Execution; Successors and Assigns . . . . . . . . . . 53
Section 11.09 Integration . . . . . . . . . . . . . . . . . . . . . 53
Section 11.10 Assignment by Purchaser . . . . . . . . . . . . . . . 54
Section 11.11 No Solicitation . . . . . . . . . . . . . . . . . . . 54
Section 11.12 Reconstitution . . . . . . . . . . . . . . . . . . . 54
EXHIBITS AND SCHEDULES
Exhibit A Mortgage Loan Schedule
Exhibit B Contents of Each Mortgage File
Exhibit C-1 Mortgage Loan Documents
Exhibit C-2 Custodial Agreement
Exhibit C-3 Request for Release of Documents and Receipt
Exhibit D-1 Custodial Account Certification
Exhibit D-2 Custodial Account Letter Agreement
Exhibit E-1 Escrow Account Certification
Exhibit E-2 Escrow Account Letter Agreement
Exhibit F Monthly Remittance Advice
Exhibit G Intentionally Deleted
Exhibit H Company's Certificate of Compliance
Exhibit I Form of Opinion of Seller's Counsel
Exhibit J Form of Opinion of Purchaser's Counsel
Exhibit K Additional Pledged Collateral Custodial Agreement
Exhibit L Intentionally Omitted
Exhibit M Form of Certificate for Nonrecoverable Advances
Exhibit N Permitted Modifications
Schedule 3.02(b) Payments Current
Schedule 3.02(ee) Mortgage Loans with Conversion Option
MORTGAGE LOAN SALE, WARRANTIES AND SERVICING AGREEMENT
This MORTGAGE LOAN SALE, WARRANTIES AND SERVICING AGREEMENT (the
"Agreement") is executed by and between ▇▇▇▇▇▇ Capital, A Division of ▇▇▇▇▇▇
Brothers Holdings Inc., as purchaser (the "Purchaser"), and Boston Safe
Deposit and Trust Company, as seller and servicer (the "Company"), as of the
1st day of January, 1997.
WITNESSETH
WHEREAS, the Purchaser has agreed to purchase from the Company and the
Company has agreed to sell to the Purchaser certain conventional, adjustable
rate first-lien mortgage loans and cooperative loans (hereinafter referred to
as "Mortgage Loans") which have an aggregate outstanding principal balance as
of the close of business on the Cut-off Date, after deduction of payments due
on or before such date, of $171,430,902.00;
WHEREAS, each of the Mortgage Loans is secured by a mortgage, deed of
trust or other security instrument creating a first lien on real estate (or
against the shares of a cooperative corporation and the related proprietary
lease) located in the jurisdiction indicated on the Mortgage Loan Schedule,
which is annexed hereto as Exhibit A;
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WHEREAS, the Purchaser and the Company have agreed that the Purchaser
will assign all of its rights and delegate all of its obligations hereunder
to the Depositor (as defined herein), which in turn will assign all of its
rights and delegate all of its obligations (except as otherwise specified
herein) hereunder to the Trustee (as defined herein) under the Trust
Agreement (as defined herein), and that each reference herein to the
Purchaser is intended, unless otherwise specified, to mean ▇▇▇▇▇▇ Capital or
the Trustee, as assignee, whichever is the holder of the Mortgage Loans from
time to time; and
WHEREAS, the Purchaser and the Company wish to prescribe the manner of
purchase of the Mortgage Loans and the management, servicing and control of
the Mortgage Loans.
NOW, THEREFORE, in consideration of the mutual agreements hereinafter
set forth, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Purchaser and the Company
agree as follows:
ARTICLE I
DEFINITIONS
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Whenever used herein, the following words and phrases, unless the
context otherwise requires, shall have the following meanings:
Accepted Servicing Practices: With respect to any Mortgage Loan,
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those mortgage servicing practices of prudent mortgage lending institutions
which service mortgage loans of the same type and quality as such Mortgage
Loan in the jurisdiction where the related Mortgaged Property is located.
Additional Collateral: Any real or personal property, securities,
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cash, instruments, contracts or other documents constituting or evidencing
collateral pledged as additional security for a Mortgage Loan (other than the
Mortgaged Property).
Additional Pledged Collateral Custodial Agreement: The agreement
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governing the retention of Additional Collateral, a form of which is annexed
hereto as Exhibit K.
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Agreement: This Mortgage Loan Sale, Warranties and Servicing
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Agreement and all amendments hereof and supplements and exhibits hereto.
ALTA: The American Land Title Association or any successor thereto.
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Appraised Value: The amount set forth in an appraisal made in
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connection with the origination of the related Mortgage Loan as the value of
the Mortgaged Property.
Assignment of Mortgage: An assignment of the Mortgage, notice of
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transfer or equivalent instrument in recordable form, sufficient under the
laws of the jurisdiction wherein the related Mortgaged Property is located to
reflect the sale of the Mortgage to the Purchaser.
BIF: The Bank Insurance Fund, or any successor thereto.
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Business Day: Any day (8:30 to 5:00 p.m. EST) other than (i) a
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Saturday or Sunday, or (ii) a day on which banking and savings and loan
institutions in the Commonwealth of Massachusetts are authorized or obligated
by law or executive order to be closed.
Buydown Mortgage Loan: A Mortgage Loan for which funds have been
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deposited with the Company by the Mortgagor and/or other third party to be
applied to the Monthly Payment for a specified period of time.
Certificates: Any or all of the Certificates to be issued pursuant
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to the Trust Agreement.
Closing Date: January 15, 1997
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Code: The Internal Revenue Code of 1986, as it may be amended from
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time to time, or any successor statute thereto, and applicable U.S.
Department of the Treasury regulations issued pursuant thereto.
Company: Boston Safe Deposit and Trust Company, or its successor in
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interest or assigns. For purposes of representations and warranties and
other provisions relating to servicing, FNMA or FHLMC qualifications,
"Company" is deemed to include the Subservicer.
Condemnation Proceeds: All awards or settlements in respect of a
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Mortgaged Property, whether permanent or temporary, partial or entire, by
exercise of the power of eminent domain or condemnation, to the extent not
required to be released to a Mortgagor in accordance with the terms of the
related Mortgage Loan Documents.
Convertible Mortgage Loan: Any Mortgage Loan as to which, pursuant
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to the related Mortgage Note, the Mortgagor may elect to convert the Mortgage
Rate from an adjustable to a fixed rate of interest.
Coop Loan: A loan secured by a first lien against (i) shares issued
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by a cooperative apartment corporation and (ii) a Mortgagor's leasehold
interest in a cooperative apartment located in such building.
Cooperative Property: The real property and improvements owned by
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the cooperative corporation, that includes the allocation of individual
dwelling units to the holders of the cooperative shares of the cooperative
corporation.
Cooperative Unit: A single family dwelling located in a Cooperative
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Property.
Custodial Account: The separate account or accounts created and
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maintained pursuant to Section 4.04.
Custodial Agreement: The Assignment and Assumption Agreement
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governing retention of the Mortgage Loan Documents, the form of which is
attached hereto as Exhibit C-2.
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Custodian: The Custodian under the Custodial Agreement, or its
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successor in interest or assigns or any successor to the Custodian under the
Custodial Agreement as provided therein.
Cut-off Date: January 1, 1997.
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Deleted Mortgage Loan: A Mortgage Loan which is repurchased by the
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Company in accordance with the terms of this Agreement or which is, in the
case of a substitution pursuant to Section 3.03, replaced or to be replaced
with one or more Qualified Substitute Mortgage Loans.
Depositor: Structured Asset Securities Corporation, a Delaware
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corporation, or its successors in interest or assigns.
Determination Date: The 12th day (or if such 12th Day is not a
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Business Day, the Business Day immediately preceding such 12th day) of the
month of the related Remittance Date.
Due Date: The day of the month on which the Monthly Payment is due
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on a Mortgage Loan, exclusive of any days of grace.
Due Period: With respect to each Remittance Date, the period
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commencing on the second day of the month preceding the month of such
Remittance Date and ending on the first day of the month of such Remittance
Date.
Errors and Omissions Insurance Policy: An errors and omissions
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insurance policy to be maintained by the Company pursuant to Section 4.12.
Escrow Account: The separate account or accounts created and
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maintained pursuant to Section 4.06.
Escrow Payments: With respect to any Mortgage Loan, the amounts
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constituting ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, mortgage insurance premiums, fire and hazard insurance
premiums, condominium charges, and any other payments required to be escrowed
by the Mortgagor with the mortgagee pursuant to the Mortgage or any other
related document.
Event of Default: Any one of the conditions or circumstances
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enumerated in Section 9.01.
FDIC: The Federal Deposit Insurance Corporation, or any successor
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thereto.
FHLMC: The Federal Home Loan Mortgage Corporation, or any successor
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thereto.
Fidelity Bond: A fidelity bond to be maintained by or on behalf of
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the Company pursuant to Section 4.12.
First Remittance Date: February 14, 1997
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FNMA: The Federal National Mortgage Association, or any successor
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thereto.
Gross Margin: With respect to each Mortgage Loan, the fixed
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percentage amount set forth in the related Mortgage Note of two hundred
seventy-five basis points (275), which amount is added to the Index in
accordance with the terms of the related Mortgage Note to determine, on each
Interest Rate Adjustment Date, the Mortgage Interest Rate for such Mortgage
Loan.
Index: On each Interest Rate Adjustment Date, the applicable index
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shall be the weekly average yield of the secondary market interest rates on
one year constant maturity treasuries (CMT).
Insurance Proceeds: With respect to each Mortgage Loan, proceeds of
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insurance policies insuring the Mortgage Loan or the related Mortgaged
Property.
Interest Rate Adjustment Date: The date on which an adjustment to
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the Mortgage Interest Rate on a Mortgage Note becomes effective. The first
Interest Rate Adjustment Date for each Mortgage Loan will occur in accordance
with the terms of the Mortgage Note.
Liquidation Proceeds: Cash received in connection with the
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liquidation of a defaulted Mortgage Loan, whether through the sale or
assignment of such Mortgage Loan, trustee's sale, foreclosure sale or
otherwise, or the sale of the related Mortgaged Property if the Mortgaged
Property is acquired in satisfaction of the Mortgage Loan.
Loan-to-Value Ratio or LTV: With respect to any Mortgage Loan, the
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ratio of the principal balance of such Mortgage Loan at origination, or the
Stated Principal Balance of such Mortgage Loan as of the Cut-Off Date or such
other date as is specified, less the minimum value of Additional Collateral
to the lesser of (a) the Appraised Value of the Mortgaged Property and (b)
if the Mortgage Loan was made to finance the acquisition of the related
Mortgaged Property, the purchase price of the Mortgaged Property, expressed
as a percentage.
Monthly Advance: The portion of Monthly Payment delinquent with
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respect to each Mortgage Loan at the close of business on the Determination
Date required to be advanced by the Company pursuant to Section 5.03 on the
Business Day immediately preceding the Remittance Date of the related month.
Monthly Payment: The scheduled monthly payment of principal and/or
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interest on a Mortgage Loan.
Mortgage: The mortgage, deed of trust, pledge and security agreement
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or other instrument securing a Mortgage Note, which creates a first lien on
either (i) an unsubordinated estate in fee simple in real property or (ii) a
first lien on a cooperative apartment lease and related cooperative
corporation shares, each as security for a Mortgage Note.
Mortgage File: The items pertaining to a particular Mortgage Loan
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referred to in Exhibit B annexed hereto, and any additional documents
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required to be added to the Mortgage File pursuant to this Agreement.
Mortgage Impairment Insurance Policy: A mortgage impairment or
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blanket hazard insurance policy as described in Section 4.11.
Mortgage Interest Rate: The annual rate of interest borne on a
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Mortgage Note, as adjusted from time to time in accordance with the
provisions of such Mortgage Note. The Mortgage Interest Rate, as determined
on each Interest Rate Adjustment Date, is equal to the sum of the Index and
the Gross Margin, adjusted, if necessary, to comply with the Mortgage
Interest Rate Cap.
Mortgage Interest Rate Cap: The limit on each Mortgage Interest Rate
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adjustment, such that as to each Mortgage Loan, the Mortgage Interest Rate
shall not: (i) be more or less than the stated periodic cap as applied to
the Mortgage Interest Rate in effect immediately prior to the particular
Interest Rate Adjustment Date of the related Mortgage Loan; and (ii) exceed
the maximum Mortgage Interest Rate Cap provided in the related Mortgage Note.
Mortgage Loan: An individual loan secured by a first lien on real
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property and each Coop Loan which is the subject of this Agreement and which
is identified on the Mortgage Loan Schedule, including, without limitation,
the Monthly Payments, Principal Prepayments, Liquidation Proceeds,
Condemnation Proceeds, Insurance Proceeds, REO Disposition Proceeds and all
other rights, benefits, proceeds and obligations arising from or in
connection with such loan.
Mortgage Loan Documents: The documents listed in Exhibit C-1 hereto
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Mortgage Loan Remittance Rate: With respect to each Mortgage Loan,
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the annual rate of interest remitted to the Purchaser, which shall be equal
to the applicable Mortgage Interest Rate minus the Servicing Fee Rate.
Mortgage Loan Schedule: A schedule of Mortgage Loans annexed hereto
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as Exhibit A, such schedule setting forth the following information with
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respect to each Mortgage Loan: (1) the Company's Mortgage Loan identifying
number; (2) the Mortgagor's name; (3) the street address of the Mortgaged
Property including the state code; (4) a code indicating whether the
Mortgaged Property is a single family residence, condominium, shares in a
cooperative corporation, or a 2-4 family residence; (5) a description of
Additional Collateral, if any, and the value thereof at the close of
business on the Cut-off Date; (6) the original months to maturity or the
remaining months to maturity from the Cut-off Date, in any case based on the
original amortization schedule, and if different, the maturity expressed in
the same manner but based on the actual amortization schedule; (7) the
Loan-to-Value Ratio at origination; (8) the Mortgage Interest Rate as of the
origination and Cut-off Dates; (9) the date on which the Mortgage Loan was
originated; (10) the stated maturity date; (11) the amount of the Monthly
Payment; (12) the last payment date on which a payment was actually applied
to the outstanding principal balance; (13) the original principal amount of
the Mortgage Loan; (14) the principal balance of the Mortgage Loan as of the
close of business on the Cut-off Date, after deduction of the payments of
principal due on or before the Cut-off Date, whether or not collected; (15)
the Index; (16) the next Interest Rate Adjustment Date; (17) the Gross
Margin; (18) the maximum Mortgage Interest Rate under the terms of the
Mortgage Note; and (19) the minimum value of any additional collateral
required under the terms of the Mortgage Loan. With respect to the Mortgage
Loans in the aggregate, the Mortgage Loan Schedule shall set forth the
following information, as of the Cut-off Date: (1) the number of Mortgage
Loans; (2) the current aggregate outstanding principal balance of the
Mortgage Loans; and (3) the weighted average Mortgage Interest Rate of the
Mortgage Loans.
Mortgage Note: The note or other evidence of the indebtedness of a
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Mortgagor secured by a Mortgage.
Mortgaged Property: The real property or shares of a cooperative
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corporation and related leasehold interest, as of the Closing Date, securing
repayment of the debt evidenced by a Mortgage Note.
Mortgagor: The obligor on a Mortgage Note.
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Nonrecoverable Advance: With respect to each Mortgage Loan, a
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Monthly Advance with regard to which the Company, in its sole discretion,
anticipates that the amount of such advance will not be ultimately
recoverable from related Liquidation Proceeds, Insurance Proceeds or other
amounts received with respect to such Mortgage Loan. The Company's
determination as to a Nonrecoverable Advance shall be evidenced by a
certificate in the form set forth in Exhibit M.
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Officer's Certificate: A certificate signed by the Chairman of the
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Board or the Vice Chairman of the Board or the President or a Vice President
or an Assistant Vice President and by the Treasurer or the Secretary or one
of the Assistant Treasurers or Assistant Secretaries of the Company, and
delivered to the Purchaser as required by this Agreement.
Opinion of Counsel: A written opinion of counsel, who may be an
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employee of the Company, reasonably acceptable to the addressee (except that
such counsel must be Independent (as defined in the Trust Agreement) outside
counsel with respect to any such opinion required under Sections 4.15 and
11.02 of this Agreement).
Person: Any individual, corporation, partnership, limited liability
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company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political
subdivision thereof.
Prime Rate: The rate published as the Prime Rate in The Wall Street
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Journal, Northeast edition.
Principal Prepayment: Any payment or other recovery of principal on
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a Mortgage Loan which is received in advance of its scheduled Due Date,
including any prepayment penalty or premium thereon and which is not
accompanied by an amount of interest representing scheduled interest due on
any date or dates in any month or months subsequent to the month of
prepayment.
Principal Prepayment Period: The month preceding the month in which
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the related Remittance Date occurs.
Purchase Price: The price as stated in the Purchase Price and Terms
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Letter.
Purchase Price and Terms Letter: The Purchase Price and Terms Letter
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dated October 24, 1996 from the Company, as accepted and agreed to by the
Purchaser.
Purchaser: ▇▇▇▇▇▇ Capital, A Division of ▇▇▇▇▇▇ Brothers Holdings
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Inc., or its successor(s) in interest or any successor to the Purchaser or
assignee thereof under this Agreement as herein provided, or of any such
assignee.
Qualified Depository: A depository the accounts of which are insured
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by the FDIC through the BIF or the SAIF and the debt obligations of which are
rated the equivalent of AA or better by each Rating Agency.
Qualified Substitute Mortgage Loan: A Mortgage Loan eligible to be
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substituted by the Company for a Deleted Mortgage Loan which must, on the
date of such substitution: (i) have an outstanding principal balance, after
deduction of all scheduled payments due in the month of substitution (or in
the case of a substitution of more than one Mortgage Loan for a Deleted
Mortgage Loan, an aggregate principal balance), not in excess of the Stated
Principal Balance of the related Deleted Mortgage Loan (to the extent that
the principal balance of the Mortgage Loan is less than the Stated Principal
Balance of the Deleted Mortgage Loan, the amount of such difference together
with one month's interest on such difference at the applicable Remittance
Rate, shall be deposited by the Company in the Custodial Account pursuant to
Section 4.04); (ii) have a Mortgage Loan Remittance Rate not less than, and
not more than 2% greater than the Mortgage Loan Remittance Rate of the
Deleted Mortgage Loan; (iii) have a Gross Margin of not more than 1/8th of
one percent (0.125%) less than the Gross Margin of the related Deleted
Mortgage Loan; (iv) have a remaining term to maturity not greater than, and
not more than one year less than that of the Deleted Mortgage Loan;
(v) comply with each representation and warranty set forth in Section 3.02;
(vi) have a Loan-to-Value Ratio as of the date of such substitution not
greater than that of the related Deleted Mortgage Loan; and (vii) not be a
Coop Loan unless the related Deleted Mortgage Loan was a Coop Loan.
Rating Agency: Either of Standard & Poor's Rating Services, a
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division of The McGraw Hill Companies, Inc. and Fitch Investors Service, L.P.
Record Date: The close of business on the last Business Day of the
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month preceding the month of the related Remittance Date.
REMIC: A "real estate mortgage investment conduit" within the
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meaning of Section 860D of the Code.
REMIC Provisions: The provisions of the federal income tax law
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relating to a REMIC, which appear at Section 860A through 860G of Subchapter
M of Chapter 1, Subtitle A of the Code, and related provisions, and
regulations, rulings or pronouncements promulgated thereunder, as the
foregoing may be in effect from time to time.
Remittance Date: The 14th day (or if such 14th day is not a Business
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Day, the first Business Day immediately preceding) of any month, beginning
with the First Remittance Date.
REO Disposition: The final sale by the Company of any REO Property.
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REO Disposition Proceeds: All amounts received with respect to an
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REO Disposition pursuant to Section 4.15.
REO Property: A Mortgaged Property acquired by the Company on behalf
------------
of the Purchaser through foreclosure or by deed in lieu of foreclosure, as
described in Section 4.15.
Repurchase Price: With respect to any Mortgage Loan, a price equal
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to (i) the Stated Principal Balance of the Mortgage Loan plus (ii) interest
on such Stated Principal Balance at the Mortgage Loan Remittance Rate from
the date on which interest has last been paid (to the extent distributed to
the Purchaser) to and including the date prior to repurchase, less amounts
received or advanced in respect of such repurchased Mortgage Loan which are
being held in the Custodial Account for distribution in the month of
repurchase.
SAIF: The Savings Association Insurance Fund, or any successor
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thereto.
Securities Act of 1933 or the 1933 Act: The Securities Act of 1933,
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as amended.
Servicing Advances: All customary, reasonable and necessary
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"out-of-pocket" costs and expenses other than Monthly Advances (including
reasonable attorneys' fees and disbursements) incurred in the performance by
the Company of its servicing obligations, including, but not limited to, the
cost of (a) the preservation, restoration and protection of the Mortgaged
Property, (b) any enforcement or judicial proceedings, including
foreclosures, (c) the management and liquidation of any REO Property and (d)
compliance with the obligations under Section 4.08.
Servicing Fee: With respect to each Mortgage Loan, the amount of the
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annual fee the Purchaser shall pay to the Company, which shall, for a period
of one full month, be equal to one-twelfth of the product of (a) the
Servicing Fee Rate and (b) the outstanding principal balance of such Mortgage
Loan. Such fee shall be payable monthly, computed on the basis of the same
principal amount and period respecting which any related interest payment on
a Mortgage Loan is computed. The obligation of the Purchaser to pay the
Servicing Fee with respect to any Mortgage Loan for any month is limited to,
and the Servicing Fee is payable solely from, the interest portion (including
recoveries with respect to interest from Liquidation Proceeds, to the extent
permitted by Section 4.05) of the related Monthly Payment collected by the
Company, or as otherwise provided under Section 4.05.
Servicing Fee Rate: 0.25% (25 basis points) per annum.
------------------
Servicing File: With respect to each Mortgage Loan, the file
--------------
retained by the Company consisting of originals of all documents in the
Mortgage File which are not delivered to the Custodian and copies of the
Mortgage Loan Documents listed in Exhibit C-1 hereto, the originals of
-----------
which are delivered to the Custodian pursuant to Section 2.01.
Servicing Officer: Any officer of the Company involved in or
-----------------
responsible for the administration and servicing of the Mortgage Loans whose
name appears on a list of servicing officers furnished by the Company to the
Purchaser upon request, as such list may from time to time be amended.
Stated Principal Balance: As to each Mortgage Loan, (i) the
------------------------
principal balance of the Mortgage Loan at the Cut-off Date after giving
effect to payments of principal due on or before such date, whether or not
received, minus (ii) all amounts previously distributed to the Purchaser with
respect to the related Mortgage Loan representing payments or recoveries of
principal or advances in lieu thereof.
Subservicer: Mellon Mortgage Company, or any other subservicer which
-----------
is subservicing the Mortgage Loans pursuant to a Subservicing Agreement. Any
Subservicer shall meet the qualifications set forth in Section 4.01.
Subservicing Agreement: An agreement between the Company and a
----------------------
Subservicer for the subservicing of the Mortgage Loans.
Trust: The trust fund established by the Trust Agreement, the assets
-----
of which primarily consist of the Mortgage Loans.
Trust Agreement: The Trust Agreement dated as of January 1, 1997
---------------
between the Depositor and the Trustee.
Trustee: Norwest Bank Minnesota, N.A., as Trustee under the Trust
-------
Agreement, or its successor in interest or assigns.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF MORTGAGE FILES;
------------------------------------------------------------
BOOKS AND RECORDS; CUSTODIAL AGREEMENT; DELIVERY OF DOCUMENTS
-------------------------------------------------------------
Section 2.01 Sale and Conveyance of Mortgage Loans; Possession of
-----------------------------------------------------
Mortgage Files; Maintenance of Servicing Files.
----------------------------------------------
(a) Sale and Conveyance of Mortgage Loans:
-------------------------------------
(1) Agreement to Purchase: The Company agrees to sell, and
---------------------
Purchaser agrees to purchase, Mortgage Loans listed on the Mortgage Loan
Schedule annexed hereto as Exhibit A, having an aggregate principal
---------
balance on the Cut-off Date of $171,430,902.00.
(2) The Company, simultaneously with the later to occur of
execution and delivery of this Agreement and the receipt of the Purchase
Price in good funds, as provided in the Purchase Price and Terms Letter, does
hereby sell, transfer, assign, set over and convey to the Purchaser, without
recourse, but subject to the terms of this Agreement, all the right, title
and interest of the Company in and to the Mortgage Loans.
(b) Possession of Mortgage Files: Pursuant to Section 2.03, the
----------------------------
Company has delivered or will have delivered as of the Closing Date the
Mortgage Loan Documents to the Custodian. The contents of each Mortgage File
and Servicing File not delivered to the Custodian are and shall be held in
trust by the Company for the benefit of the Purchaser as the owner thereof.
Upon the sale of the Mortgage Loans the ownership of each Mortgage Note, the
related Mortgage and the related Mortgage File and Servicing File shall vest
immediately in the Purchaser, and the ownership of all records and documents
with respect to the origination of each related Mortgage Loan prepared by or
which come into the possession of the Company shall vest immediately in the
Purchaser and shall be retained and maintained by the Company, in trust, at
the will of the Purchaser and only in such custodial capacity.
(c) Maintenance of Servicing Files: The Company shall maintain a
------------------------------
Servicing File consisting of all records required to service the Mortgage
Loan. Each Servicing File shall be marked appropriately to reflect clearly
the sale of the related Mortgage Loan to the Purchaser, and records relating
to the Servicing Files will reflect their segregation from other files in the
Servicer's possession. Ownership of Servicing Files shall be retained by the
Company. The Company shall release the contents of any Servicing File only
in accordance with written instructions from the Purchaser or its designee,
unless such release is required as incidental to the Company's servicing of
the Mortgage Loans or relates to a repurchase of any Mortgage Loan pursuant
to Section 3.03 or Section 6.02. In the event the Company resigns or is
terminated in accordance with the terms of this Agreement, the Company shall
within a reasonable time thereafter release the Servicing Files to Purchaser
or its designee.
Section 2.02 Books and Records; Transfers of Mortgage Loans.
----------------------------------------------
From and after the sale of the Mortgage Loans to the Purchaser, all
rights arising out of the Mortgage Loans, including but not limited to all
funds received on or in connection with each Mortgage Loan, shall be received
and held by the Company in trust for the benefit of the Purchaser as owner of
the Mortgage Loans, and the Company shall retain record title to the related
Mortgages for the sole purpose of facilitating the servicing and the
supervision of the servicing of Mortgage Loans.
The sale of each Mortgage Loan shall be reflected on the Company's
balance sheet and other financial statements as a sale of assets by the
Company. The Company shall be responsible for maintaining, and shall
maintain, a complete set of books and records for each Mortgage Loan which
shall be marked clearly to reflect the ownership of each Mortgage Loan by the
Purchaser. In particular, the Company shall maintain in its possession,
available for inspection by the Purchaser, or its designee and shall deliver
to the Purchaser upon demand, evidence of compliance with all federal, state
and local laws, rules and regulations. To the extent that original documents
are not required for purposes of realization of Liquidation Proceeds,
Condemnation Proceeds or Insurance Proceeds, documents maintained by the
Company may be in the form of microfilm or microfiche or such other reliable
means of recreating original documents, including but not limited to, optical
imagery techniques.
The Company shall maintain with respect to each Mortgage Loan and shall
make available for inspection by any Purchaser or its designee the related
Servicing File during the time the Purchaser retains ownership of a Mortgage
Loan and thereafter in accordance with applicable laws and regulations.
The Company shall keep at its servicing office books and records in
which, subject to such reasonable regulations as it may prescribe, the
Company shall note transfers of Mortgage Loans. No transfer of a Mortgage
Loan may be made unless such transfer is in compliance with the terms hereof.
For the purposes of this Agreement, the Company shall be under no obligation
to deal with any person with respect to this Agreement or the Mortgage Loans
unless the books and records show such a person as the owner of the Mortgage
Loan. The Purchaser may, subject to the terms of this Agreement, sell and
transfer one or more of the Mortgage Loans, and any subsequent purchaser of
one or more Mortgage Loans may sell and transfer such Mortgage Loans;
provided, however, that in no event shall there be more than three persons at
any given time having the status of "Purchaser" hereunder. The Purchaser
shall advise the Company of the transfer of any Mortgage Loan by the
Purchaser, and upon receipt of notice of such transfer, the Company shall
▇▇▇▇ its books and records to reflect the ownership of the Mortgage Loans by
such transferee, and shall release the previous Purchaser from its
obligations hereunder with respect to the Mortgage Loans sold or transferred.
Upon receipt of notice of any subsequent transfer of any Mortgage Loan, the
Company shall ▇▇▇▇ its books and records to reflect the ownership of such
Mortgage Loan by such subsequent transferee.
Section 2.03 Additional Pledged Collateral Custodial Agreement;
--------------------------------------------------
Delivery of Documents.
---------------------
Except as provided by the Additional Pledged Collateral Custodial
Agreement delivered herewith, the Company has or will have by the Closing
Date delivered and released to the Custodian those Mortgage Loan Documents
as required by this Agreement with respect to each Mortgage Loan, a list of
which is attached as Exhibit C-1 hereto.
The Custodian has certified its receipt of all such Mortgage Loan
Documents required to be delivered, as evidenced by a certification.
Within 90 days of receipt by the Company of a copy of the initial
certification of the Custodian (the "Custodian Certificate") which indicates
that any of the Mortgage Loan Documents is missing, does not appear regular
on its face (i.e., is mutilated, damaged, defaced, torn or otherwise
physically altered) (each, a "Material Defect"), the Company shall cure such
Material Defect or, if it does not cure such Material Defect within such
period and such Material Defect has, in Purchaser's reasonable judgement, a
material adverse effect on Purchaser's ability to enforce the obligations of
the borrower or the guarantor, as the case may be, under the Mortgage Loan
Documents, repurchase the related Mortgage Loan at the Repurchase Price (or,
to the extent provided in Section 3.03, substitute one or more Qualifying
Substitute Mortgage Loans).
The Company shall forward to the Custodian original documents evidencing
any assumption, modification, consolidation or extension of any Mortgage Loan
entered into in accordance with Section 4.01 or Section 6.01 within one week
of its execution; provided, however, that the Company shall provide the
Custodian with a certified true copy of any such document submitted for
recordation within one week of its execution and shall provide the original
of any document submitted for recordation or a copy of such document
certified by the appropriate public recording office to be a true and
complete copy of the original within sixty (60) days of its submission for
recordation.
ARTICLE III
REPRESENTATIONS AND WARRANTIES;
--------------------------------
REMEDIES AND BREACH
-------------------
Section 3.01 Company Representations and Warranties.
--------------------------------------
The Company represents and warrants to the Purchaser that, as of the
Closing Date:
(a) Due Organization and Authority. The Company is a trust company
-------------------------------
duly organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts and is licensed, qualified and in good standing
in each state where a Mortgaged Property is located if the laws of such state
require licensing or qualification in order to conduct business of the type
conducted by the Company, and in any event the Company is in compliance with
the laws of any such state to the extent necessary to ensure the
enforceability of the related Mortgage Loan and the servicing of such
Mortgage Loan in accordance with the terms of this Agreement; the Company has
the full corporate power and authority to execute and deliver this Agreement
and to perform in accordance herewith; the execution, delivery and
performance of this Agreement (including all instruments of transfer to be
delivered pursuant to this Agreement) by the Company and the consummation of
the transactions contemplated hereby have been duly and validly authorized;
this Agreement evidences the valid, binding and enforceable obligation of the
Company; and all requisite corporate action has been taken by the Company to
make this Agreement valid and binding upon the Company in accordance with its
terms;
(b) Ordinary Course of Business. The consummation of the
----------------------------
transactions contemplated by this Agreement are in the ordinary course of
business of the Company, and the transfer, assignment and conveyance of the
Mortgage Notes and the Mortgages by the Company pursuant to this Agreement
are not subject to the bulk transfer or any similar statutory provisions in
effect in any applicable jurisdiction;
(c) No Conflicts. Neither the execution and delivery of this
------------
Agreement, the origination or acquisition of the Mortgage Loans by the
Company, the sale of the Mortgage Loans to the Purchaser or the other
transactions contemplated hereby, nor the fulfillment of or compliance with
the terms and conditions of this Agreement, will conflict materially with or
result in a material breach of any of the terms, conditions or provisions of
the Company's charter or by-laws or any legal restriction or any agreement or
instrument to which the Company is now a party or by which it is bound,
constitute a default or result in an acceleration under any of the foregoing,
or result in any material violation of any law, rule, regulation, order,
judgment or decree to which the Company or its property is subject, or impair
the ability of the Purchaser to realize on the Mortgage Loans, or impair the
value of the Mortgage Loans;
(d) Ability to Service. The Company is an approved seller/servicer
------------------
of conventional residential mortgage loans for FNMA or FHLMC, with the
facilities, procedures, and experienced personnel necessary for the
servicing, in accordance with Accepted Servicing Practices, of mortgage loans
of the same type as the Mortgage Loans, and is in good standing, to sell
mortgage loans to and service mortgage loans for FNMA or FHLMC, and no event
has occurred, including but not limited to a change in insurance coverage,
which would make the Company unable to comply with FNMA or FHLMC eligibility
requirements or which would require notification to either FNMA or FHLMC;
(e) Reasonable Servicing Fee. The Company acknowledges and agrees
-------------------------
that the Servicing Fee, as calculated at the Servicing Fee Rate, represents
reasonable compensation for performing such services and that the entire
Servicing Fee shall be treated by the Company, for accounting and tax
purposes, as compensation for the servicing and administration of the
Mortgage Loans pursuant to this Agreement;
(f) Ability to Perform. The Company does not believe, nor does it
-------------------
have any reason or cause to believe, that it cannot perform each and every
covenant contained in this Agreement;
(g) No Litigation Pending. There is no action, suit, proceeding or
----------------------
investigation pending or threatened against the Company which, either in any
one instance or in the aggregate, may result in any material adverse change
in the business, operations, financial condition, properties or assets of the
Company, or in any material impairment of the right or ability of the Company
to carry on its business substantially as now conducted, or in any material
liability on the part of the Company, or which would draw into question the
validity of this Agreement or the Mortgage Loans or of any action taken or to
be taken in connection with the obligations of the Company contemplated
herein, or which would be likely to impair materially the ability of the
Company to perform under the terms of this Agreement;
(h) No Consent Required. No consent, approval, authorization or
--------------------
order of any court or governmental agency or body is required for the
execution, delivery and performance by the Company of or the compliance by
the Company with this Agreement or the sale of the Mortgage Loans as
evidenced by the consummation of the transactions contemplated by this
Agreement, or if required, such approval has been obtained prior to the
Closing Date;
(i) Selection Process. The Mortgage Loans were selected from among
-----------------
the outstanding adjustable rate one- to four- family mortgage loans in the
Company's portfolio at the Closing Date as to which the representations and
warranties set forth in Section 3.02 could be made and such selection was not
made in a manner so as to affect adversely the interests of the Purchaser;
(j) No Untrue Information. Neither this Agreement nor any
---------------------
statement, report or other document furnished or to be furnished pursuant to
this Agreement or in connection with the transactions contemplated hereby
contains any materially untrue statement of fact or omits to state a fact
necessary to make the statements contained therein not misleading;
(k) (RESERVED);
(l) Sale Treatment. The Company has determined that the disposition
--------------
of the Mortgage Loans pursuant to this Agreement will be afforded sale
treatment for accounting and tax purposes;
(m) Financial Statements. The Company has delivered to the
---------------------
Purchaser consolidated financial statements of Mellon Bank Corporation, as to
its last two complete fiscal years and any later quarter ended more than
sixty (60) days prior to the execution of this Agreement. All such financial
statements fairly present the pertinent results of operations and affiliates
and have been prepared in accordance with generally accepted accounting
principles constantly applied throughout the periods involved, except as set
forth in the notes thereto. In addition, the Company has delivered
information as to its conventional mortgage loan delinquency and foreclosure
experience for the immediately preceding three-year period, in each case with
respect to mortgage loans owned by it and such mortgage loans serviced for
others during such period, and all such information so delivered is true and
correct in all material respects. There has been no change in the business,
operations, financial condition, properties or assets of the Company since
the date of the Company's financial statements that would have a material
adverse effect on its ability to perform its obligations under this
Agreement. The Company has completed any forms requested by the Purchaser in
a timely manner and in accordance with the provided instructions;
(n) No Brokers' Fees. The Company has not dealt with any broker,
----------------
investment banker, agent or other person that may be entitled to any
commission or compensation in connection with the sale of the Mortgage Loans;
and
(o) Fair Consideration. The consideration received by the Company
------------------
upon the sale of the Mortgage Loans under this Agreement constitutes fair
consideration and reasonably equivalent value for the Mortgage Loans.
Section 3.02 Representations and Warranties Regarding Individual
---------------------------------------------------
Mortgage Loans.
--------------
As to each Mortgage Loan, the Company hereby represents and warrants to
the Purchaser that, as of the Closing Date:
(a) Mortgage Loans as Described. The information set forth in the
----------------------------
Mortgage Loan Schedule is complete, true and correct, in all material
respects;
(b) Payments Current. Except as set forth in Schedule 3.02(b), all
----------------
payments required to be made up to the Closing Date for the Mortgage Loan
under the terms of the Mortgage Note have been made and credited. No payment
required under the Mortgage Loan has been delinquent by more than thirty (30)
days within the twelve months preceding the Cut-off Date;
(c) No Outstanding Charges. There are no defaults in complying with
----------------------
the terms of the Mortgages, and Company has no notice as to any taxes,
governmental assessments, insurance premiums, water, sewer and municipal
charges, leasehold payments or ground rents which previously became due and
owing but which have not been paid. The Company has not advanced funds,
directly or indirectly, for the payment of any amount required under the
Mortgage Loan, except for interest accruing from the date of the Mortgage
Note or date of disbursement of the Mortgage Loan proceeds, whichever is
greater, to the day which precedes by one month the Due Date of the first
installment of principal and interest;
(d) Original Terms Unmodified. The terms of the Mortgage Note and
-------------------------
Mortgage have not been impaired, waived, altered or modified in any respect,
except by a written instrument (which, if necessary to protect the interests
of the Purchaser, has been recorded) which has been delivered to the
Custodian;
(e) No Defenses. The Mortgage Loan is not subject to any right of
-----------
rescission, set-off, counterclaim or defense, including without limitation
the defense of usury, nor will the operation of any of the terms of the
Mortgage Note or the Mortgage, or the exercise of any right thereunder,
render either the Mortgage Note or the Mortgage unenforceable, in whole or in
part, or subject to any right of rescission, set-off, counterclaim or
defense, including without limitation the defense of usury, and no such right
of rescission, set-off, counterclaim or defense has been asserted with
respect thereto, and Company has no knowledge that any Mortgagor was a debtor
in any state or federal bankruptcy or insolvency proceeding at the time the
Mortgage Loan was originated;
(f) Hazard Insurance. Except in the case of Coop Loans, the
----------------
Mortgage requires all buildings or other improvements on the Mortgaged
Property to be insured by a generally acceptable insurer against loss by
fire, hazards of extended coverage and such other hazards as are customary in
the area where the Mortgaged Property is located pursuant to insurance
policies conforming to the requirements of Section 4.10. If upon origination
of the Mortgage Loan, the Mortgaged Property was in an area identified in the
Federal Register by the Federal Emergency Management Agency as having special
flood hazards (and such flood insurance has been made available) a flood
insurance policy meeting the requirements of the current guidelines of the
Federal Flood Insurance Administration is in effect which policy conforms to
the requirements of Section 4.10. All individual insurance policies contain
a standard mortgagee clause naming the Company and its successors and assigns
as mortgagee, and all premiums thereon have been paid. The Mortgage
obligates the Mortgagor thereunder to maintain the hazard insurance policy
at the Mortgagor's cost and expense, and on the Mortgagor's failure to do so,
authorizes the holder of the Mortgage to obtain and maintain such insurance
at such Mortgagor's cost and expense, and to seek reimbursement therefor from
the Mortgagor. Where required by state law or regulation, the Mortgagor has
been given an opportunity to choose the carrier of the required hazard
insurance, provided the policy is not a "master" or "blanket" hazard
insurance policy covering the common facilities of a planned unit
development. The hazard insurance policy is the valid and binding obligation
of the insurer, is in full force and effect, and will be in full force and
effect and inure to the benefit of the Purchaser upon the consummation of the
transactions contemplated by this Agreement. The Company has not engaged in,
and has no knowledge of the Mortgagor's or any Subservicer's having engaged
in, any act or omission which would impair the coverage of any such policy,
the benefits of the endorsement provided for therein, or the validity and
binding effect of either, including without limitation, no unlawful fee,
commission, kickback or other unlawful compensation or value of any kind has
been or will be received, retained or realized by any attorney, firm or other
person or entity, and no such unlawful items have been received, retained or
realized by the Company;
(g) Compliance with Applicable Laws. Any and all requirements of
----------------------------------
any federal, state or local law including, without limitation, usury,
truth-in-lending, real estate settlement procedures, consumer credit
protection, equal credit opportunity or disclosure laws applicable to the
Mortgage Loan have been complied with, and the Company shall maintain in its
possession, available for the Purchaser's inspection, and shall deliver to
the Purchaser upon demand, evidence of compliance with all such requirements;
(h) No Satisfaction of Mortgage. The lien against the Mortgaged
---------------------------
Property has not been satisfied, canceled, subordinated or rescinded, in
whole or in part, and the Mortgaged Property has not been released from the
lien of the Mortgage, in whole or in part, nor has any instrument been
executed that would effect any such release, cancellation, subordination or
rescission. The Company has not waived the performance by the Mortgagor of
any action, if the Mortgagor's failure to perform such action would cause
the Mortgage Loan to be in default, nor has the Company waived any default
resulting from any action or inaction by the Mortgagor;
(i) Location and Type of Mortgaged Property. Except for Coop Loans,
---------------------------------------
the Mortgaged Property is located in the state identified in the Mortgage
Loan Schedule and consists of a parcel of real property with a detached
single family residence erected thereon or upon which a detached single
family residence will be erected, or a two- to four- family dwelling, or an
individual condominium unit in a condominium project, or an individual unit
in a planned unit development. For Coop Loans, the Mortgaged Property
consists of shares of stock in a cooperative housing corporation and a
leasehold interest in a cooperative apartment owned by such corporation
located in the state identified in the Mortgaged Loan Schedule;
(j) Valid First Lien. The Mortgage is a valid, subsisting,
----------------
enforceable and perfected first lien on the Mortgaged Property. Where the
Mortgaged Property consists of residential real estate, the lien includes all
buildings on the Mortgaged Property and all installations and mechanical,
electrical, plumbing, heating and air conditioning systems located in or
annexed to such building, and all additions, alterations, and replacements
made at any time with respect to the foregoing. The lien of the Mortgage is
subject only to:
(1) the lien of current real property taxes and assessments
not yet due and payable;
(2) covenants, conditions and restrictions, rights of way,
easements and other matters of the public record as of the date of
recording acceptable to mortgage lending institutions generally and
specifically referred to in the lender's title insurance policy
delivered to the originator of the Mortgage Loan and (i) referred
to or otherwise considered in the appraisal made for the originator
of the Mortgage Loan or (ii) which do not adversely affect the
Appraised Value of the Mortgaged Property set forth in such
appraisal; and
(3) other matters to which like properties are commonly
subject which do not materially interfere with the benefits of the
security intended to be provided by the Mortgage or the use,
enjoyment, value or marketability of the related Mortgaged
Property.
Any security agreement, chattel mortgage or equivalent document related to
and delivered in connection with the Mortgage Loan establishes and creates a
valid, subsisting and enforceable first lien and first priority security
interest on the Mortgaged Property and any additional collateral for the
Mortgage Loan and the Company has full right to sell and assign the same to
the Purchaser;
(k) Validity of Mortgage Documents. The Mortgage Note and the
-------------------------------
Mortgage are genuine, and each is the legal, valid and binding obligation of
the maker thereof enforceable in accordance with its terms. All parties to
the Mortgage Note and the Mortgage and any other related agreement had legal
capacity to enter into the Mortgage Loan and to execute and deliver the
Mortgage Note and the Mortgage and any other related agreement, and the
Mortgage Note and the Mortgage have been duly and properly executed by such
parties. The documents, instruments and agreements submitted for loan
underwriting were not falsified and contain no untrue statement of material
fact or omit to state a material fact required to be stated therein or
necessary to make the information and statements therein not misleading. No
fraud was committed in connection with the origination of the Mortgage Loan.
The Company has reviewed all of the documents constituting the Servicing File
and has made such inquiries as it deems necessary to make and confirm the
accuracy of the representations set forth herein;
(l) Full Payment of Costs. All costs, fees and expenses incurred in
---------------------
making or closing the Mortgage Loan and the recording of the Mortgage were
paid, and the Mortgagor is not entitled to any refund of any amounts paid or
due under the Mortgage Note or Mortgage;
(m) Ownership. Immediately prior to the sale of the Mortgage Loans
---------
by the Company to the Purchaser pursuant to this Agreement, the Company was
the sole owner of record and holder of the Mortgage Loan. The Mortgage Loan
is not assigned or pledged, and the Company has good and marketable title
thereto, and has full right to transfer and sell the Mortgage Loan therein to
the Purchaser free and clear of any encumbrance, equity, participation
interest, lien, pledge, charge, claim or security interest, and has full
right and authority subject to no interest or participation of, or agreement
with, any other party, to sell and assign each Mortgage Loan pursuant to this
Agreement;
(n) Doing Business. All parties which have had any interest in the
--------------
Mortgage Loan, whether as mortgagee, assignee, pledgee or otherwise, are (or,
during the period in which they held and disposed of such interest, were) (1)
in compliance with any and all applicable licensing requirements of the laws
of the state wherein the real Mortgaged Property is located, and (2)
organized under the laws of such state, or (3) qualified to do business in
such state, or (4) federal savings and loan associations or national banks
having principal offices in such state, or (5) not doing business in such
state;
(o) LTV. No Mortgage Loan has a Loan-to-Value Ratio at origination
---
(or, if any Mortgage Loan has been the subject of a significant modification
since origination, other than as a result of a default or imminent default,
as of the date of such modification) equal to or greater than 90%.
(p) Title Insurance. Except in the case of Coop Loans, the Mortgage
---------------
Loan is covered by either (i) an attorney's opinion of title and abstract of
title the form and substance of which is acceptable to mortgage lending
institutions making mortgage loans in the area where the Mortgaged Property
is located or (ii) an ALTA lender's title insurance policy or other generally
acceptable form of policy of insurance acceptable to FNMA or FHLMC, issued by
a title insurer acceptable to FNMA or FHLMC and qualified to do business in
the jurisdiction where the Mortgaged Property is located, insuring the
Company, its successors and assigns, as to the first priority lien of the
Mortgage in the original principal amount of the Mortgage Loan, and against
any loss by reason of the invalidity or enforceability of the lien resulting
from the provisions of the Mortgage providing for adjustment in the Mortgage
Interest Rate and Monthly Payment, subject only to the exceptions contained
in clauses (1), (2) and (3) of paragraph (j) of this Section 3.02 and against
any loss resulting from the provisions of the Mortgage providing for
adjustment to the Mortgage Interest Rate and Monthly Payment. Where required
by state law or regulation, the Mortgagor has been given the opportunity to
choose the carrier of the required mortgage title insurance. Additionally,
such lender's title insurance policy affirmatively insures ingress and
egress, and against encroachments by or upon the Mortgaged Property or any
interest therein. If the Mortgaged Property is a condominium unit located in
a state in which a title insurer will generally issue an endorsement, then
the related title insurance policy contains an endorsement insuring the
validity of the creation of the condominium form of ownership with respect to
the project in which such unit is located. The Company is the sole insured
of such lender's title insurance policy, and such lender's title insurance
policy is in full force and effect and will be in force and effect upon the
consummation of the loan sale transaction contemplated by this Agreement. No
claims have been made under such lender's title insurance policy, and no
prior holder of the Mortgage, including the Company, has done, by act or
omission, anything which would impair the coverage of such lender's title
insurance policy including without limitation, no unlawful fee, commission,
kickback or other unlawful compensation or value of any kind has been or will
be received, retained or realized by any attorney, firm or other person or
entity, and no such unlawful items have been received, retained or realized
by the Company;
(q) No Defaults. There is no default, breach, violation or event of
-----------
acceleration existing under the Mortgage or the Mortgage Note and no event
which, with the passage of time or with notice and the expiration of any
grace or cure period, would constitute a default, breach, violation or event
of acceleration, and neither the Company nor its predecessors have waived any
default, breach, violation or event of acceleration, and no foreclosure
action has been commenced with respect to any Mortgage Loan;
(r) No Mechanics' Liens. There are no mechanics' or similar liens
-------------------
or claims which have been filed for work, labor or material (and no rights
are outstanding that under the law could give rise to such liens) affecting
the Mortgaged Property which are or may be liens prior to, or equal or
subordinate with the lien of the related Mortgage;
(s) Location of Improvements; No Encroachments. All improvements
------------------------------------------
which were considered in determining the Appraised Value of the Mortgaged
Property lay wholly within the boundaries and building restriction lines of
the Mortgaged Property (and, if the property is a condominium unit, such
improvements lie wholly within the project) and no improvements on adjoining
properties encroach upon the Mortgaged Property. No improvement located on
or being part of the Mortgaged Property is in violation of any applicable
zoning law or regulation;
(t) Origination; Payment Terms. At the time the Mortgage Loan was
--------------------------
originated, the originator was a Mortgagee approved by the Secretary of
Housing and Urban Development pursuant to Sections 203 and 211 of the
National Housing Act or a savings and loan association, a savings bank, a
commercial bank or similar banking institution which is supervised and
examined by a Federal or State authority. The documents, instruments and
agreements submitted for loan underwriting were not falsified and contain no
untrue statement of material fact or omit to state a material fact required
to be stated therein or necessary to make the information and statements
therein not misleading. The Mortgage Interest Rate is adjusted on each
Interest Rate Adjustment Date to equal the Index plus the Gross Margin, which
amount is added in accordance with the terms of the Mortgage Note, subject to
the Mortgage Interest Rate Cap. The Mortgage Note is payable each month in
installments of principal and/or interest, which installments of interest are
subject to change due to the adjustments to the Mortgage Interest Rate on
each Interest Rate Adjustment Date, with interest calculated and payable in
arrears, sufficient to amortize the Mortgage Loan fully by the stated
maturity date, over an original term of not more than thirty (30) years. The
Mortgage Note provides for accrual of interest on the basis of a 360 day year
consisting of twelve 30-day months. There is no negative amortization. At
no time has the Mortgage Interest Rate exceeded the lifetime cap as set forth
in the related Note.
(u) Customary Provisions. The Mortgage contains customary and
--------------------
enforceable provisions such as to render the rights and remedies of the
holder thereof adequate for the realization against the Mortgaged Property of
the benefits of the security provided thereby, including (i) in the case of a
Mortgage designated as a deed of trust, by trustee's sale, and (ii) otherwise
by judicial foreclosure. Upon default by a Mortgagor on a Mortgage Loan,
foreclosure on, or trustee's sale of, the Mortgaged Property pursuant to the
proper procedures, the holder of the Mortgage Loan will be able to deliver
good and merchantable title to the Mortgaged Property. There is no homestead
or other exemption available to a Mortgagor which would interfere with the
right to sell the Mortgaged Property at a trustee's sale or the right to
foreclose the Mortgage;
(v) Underwriting. The Mortgage Loans were generally underwritten
------------
and approved substantially in accordance with the Company's written
procedures and standards set forth in the attachment to the Purchase Price
and Terms Letter;
(w) Occupancy of the Mortgaged Property. As of the Closing Date the
-----------------------------------
Mortgaged Property (or, in the case of a Coop Loan, the related Cooperative
Unit) is lawfully occupied under applicable law. All inspections, licenses
and certificates required to be made or issued with respect to all occupied
portions of the Mortgaged Property (or, in the case of a Coop Loan, the
related Cooperative Unit) and, with respect to the use and occupancy of the
same, including but not limited to certificates of occupancy and fire
underwriting certificates, have been made or obtained from the appropriate
authorities;
(x) No Additional Collateral. With the exception of Mortgage Loans
------------------------
identified on the Mortgage Loan Schedule as having additional collateral, the
Mortgage Note is not secured by any collateral except the lien on Mortgaged
Property created by the corresponding Mortgage and the security interest or
any applicable security agreement or chattel mortgage referred to in Section
3.02(j) above;
(y) Deeds of Trust. In the event the Mortgage constitutes a deed of
--------------
trust, a trustee, duly qualified under applicable law to serve as such, has
been properly designated and currently so serves and is named in the
Mortgage, and no fees or expenses are or will become payable by the Purchaser
to the trustee under the deed of trust, except in connection with a trustee's
sale after default by the Mortgagor;
(z) Acceptable Investment. The Company has no knowledge of any
---------------------
circumstances or conditions with respect to the Mortgage, the Mortgaged
Property, the Mortgagor and/or the Mortgagor's credit standing that can
reasonably be expected to:
(i) cause private institutional investors to regard the Mortgage
Loan as an unacceptable investment;
(ii) cause the Mortgage Loan to become delinquent; or
(iii) adversely affect the value or marketability of the
Mortgage Loan;
(aa) Delivery of Mortgage Documents. The Mortgage Loan Documents
------------------------------
have been delivered (or will have been delivered by the Closing Date) to the
Custodian. The Company is in possession of a complete, true and accurate
Mortgage File in compliance with Exhibit B, except for such
---------
documents the originals of which have been delivered to the Custodian;
(bb) Appraisal. The Mortgage File contains an appraisal of the
---------
related Mortgaged Property conducted by a qualified appraiser, duly appointed
by the Company, who had no interest direct or indirect in the Mortgaged
Property or in any loan made on the security thereof, and whose compensation
is not affected by the approval or disapproval of the Mortgage Loan, and the
appraisal and appraiser both satisfy the requirements of Title XI of the
Federal Institution Reform, Recovery, and Enforcement Act of 1989 and the
regulations promulgated thereunder, all as in effect on the date the
Mortgage Loan was originated;
(cc) Transfer of Mortgage Loans. The Assignment of Mortgage is in
--------------------------
recordable form and is acceptable for recording under the laws of the
jurisdiction in which the Mortgaged Property consisting of residential real
estate is located;
(dd) Due on Sale. The Mortgage contains an enforceable provision for
-----------
the acceleration of the payment of the unpaid principal balance of the
Mortgage Loan in the event that the Mortgaged Property is sold or transferred
without the prior written consent of the mortgagee thereunder;
(ee) Conversion to Fixed Interest Rate. Except as set forth in
---------------------------------
Schedule 3.02 (ee), the Mortgage Loan does not contain a provision permitting
or requiring conversion to a fixed interest rate Mortgage Loan;
(ff) Consolidation of Future Advances. None of the Mortgage Loans
--------------------------------
contain any provisions permitting future advances after the Cut-off Date.
Any future advances made prior to the Cut-off Date have been consolidated
with the outstanding principal amount secured by the Mortgage, and the
secured principal amount, as consolidated, bears a single interest rate and
single repayment term. Except in the case of Coop Loans, the lien of the
Mortgage securing the consolidated principal amounts is insured as having
first lien priority by a title insurance policy, and endorsement to the
policy insuring the mortgagee's consolidated interest or by other title
evidence. The consolidated principal amount does not exceed the original
principal amount of the Mortgage Loan;
(gg) Mortgaged Property Undamaged. There is no proceeding pending
----------------------------
for the total or partial condemnation of the Mortgaged Property. The
Mortgaged Property is undamaged by waste, fire, earthquake or earth movement,
windstorm, flood, tornado or other casualty so as to affect adversely the
value of the Mortgaged Property as security for the Mortgage Loan or the use
for which the premises were intended;
(hh) Collection Practices; Escrow Deposits; Interest Rate
----------------------------------------------------
Adjustments. The origination and collection practices used with respect
-----------
to the Mortgage Loan have been in accordance with Accepted Servicing
Practices, and have been in all respects in compliance with all applicable
laws and regulations. All Mortgage Interest Rate adjustments have been made
in compliance with state and federal law and the terms of the related
Mortgage Note. Any interest required to be paid pursuant to state and local
law has been properly paid and credited;
(ii) Environmental Matters. To the best of the Company's knowledge,
---------------------
the Mortgaged Property is free from any and all toxic or hazardous substances
and there exists no violation of any local, state or federal environmental
law, rule or regulation;
(jj) Soldiers' and Sailors' Relief Act. The Mortgagor has not
---------------------------------
notified the Company, and the Company has no knowledge, of any relief
requested or allowed to the Mortgagor under the Soldiers' and Sailors' Civil
Relief Act of 1940;
(kk) Intentionally omitted.
(ll) Mortgage Discharge. The Mortgagor has executed a statement to
------------------
the effect that the Mortgagor has received certain identified disclosure
materials, which materials the Seller was required by applicable law to
deliver to the Mortgagor. The Company shall maintain such statement in the
Mortgage File;
(mm) REMIC Qualification. Each Mortgage Loan is a "qualified
-------------------
mortgage" within the meaning of Section 860G of the Code and Treas. Reg.
1.860G-2;
(nn) Buydown Mortgage Loans. Except as provided on Schedule I
----------------------
hereto, none of the Mortgage Loans is a Buydown Mortgage Loan;
(oo) No Partial Release of Collateral. No Mortgage Loan requires the
--------------------------------
Mortgagee to release any portion of the Mortgaged Property from the lien of
the Mortgage other than (i) upon payment in full of the Mortgage Loan or
(ii) with respect to Mortgaged Property consisting of more than one piece of
real property or shares of a cooperative corporation, a release of a portion
of the Mortgaged Property upon a partial repayment of the Mortgage Loan,
provided the LTV of the remaining Mortgaged Property after the release does
not exceed 90%.
Section 3.03 Remedies for Breach of Representations and Warranties.
-----------------------------------------------------
It is understood and agreed that the representations and warranties set
forth in Sections 3.01 and 3.02 shall survive the sale of the Mortgage Loans
to the Purchaser and the subsequent sale of the Mortgage Loans by the
Purchaser to the Depositor and by the Depositor to the Trustee under the
Trust Agreement, and the delivery of the Mortgage Loan Documents to the
Custodian and shall inure to the benefit of the Purchaser, specifically,
including the Trustee, as provided in Section 11.10 hereof, notwithstanding
any restrictive or qualified endorsement on any Mortgage Note or Assignment
of Mortgage or the examination or failure to examine any Mortgage File. Upon
discovery by either the Company or the Purchaser of a breach of any of the
foregoing representations and warranties which materially and adversely
affects the value of the Mortgage Loans or the interest of the Purchaser (or
which materially and adversely affects the interests of the Purchaser in the
related Mortgage Loan in the case of a representation and warranty relating
to a particular Mortgage Loan) the party discovering such breach shall give
prompt written notice to the other.
Within sixty (60) days of the earlier of either discovery by or notice
to the Company of any breach of a representation or warranty which materially
and adversely affects the value of the Mortgage Loans or the interest of the
Purchaser (or which materially and adversely affects the interests of
Purchaser in the related Mortgage Loan in the case of a representation and
warranty relating to a particular Mortgage Loan), the Company shall use its
best efforts promptly to cure such breach in all material respects and, if
such breach cannot be cured, the Company shall, at the Purchaser's option,
repurchase such Mortgage Loan at the Repurchase Price. In the event that a
breach shall involve any representation or warranty set forth in Section
3.01, and either discovery by or notice to the Company of such breach, all of
the Mortgage Loans shall, at the Purchaser's option, be repurchased by the
Company at the Repurchase Price. However, if the breach shall involve a
representation or warranty set forth in Section 3.02, the Company may, at its
option and provided that the Company has a Qualified Substitute Mortgage
Loan, rather than repurchase the Mortgage Loan as provided above, remove such
Mortgage Loan (a "Deleted Mortgage Loan") and substitute in its place a
Qualified Substitute Mortgage Loan or Loans, provided that no such
substitution shall be made (i) after the two-year period beginning on the
Closing Date and (ii) unless the Purchaser has received an Opinion of Counsel
(at the expense of the Company) that such substitution will not adversely
affect the status of any REMIC established pursuant to the Trust Agreement as
a REMIC or cause any such REMIC to be deemed to have engaged in a "prohibited
transaction" under the REMIC provisions. If the Company has no Qualified
Substitute Mortgage Loan, it shall repurchase the deficient Mortgage Loan.
Any repurchase of a Mortgage Loan or Loans pursuant to the foregoing
provisions of this Section 3.03 shall be accomplished by deposit in the
Custodial Account of the amount of the Repurchase Price for distribution to
Purchaser on the next scheduled Remittance Date, after deducting therefrom
any amount received in respect of such repurchased Mortgage Loan or Loans and
being held in the Custodial Account for future distribution.
At the time of repurchase or substitution, the Purchaser and the Company
shall arrange for the reassignment of the Deleted Mortgage Loan to the
Company and the delivery to the Company of any documents held by the
Custodian relating to the Deleted Mortgage Loan. In the event of a
repurchase or substitution, the Company shall, simultaneously with such
reassignment, give written notice to the Purchaser that such repurchase or
substitution has taken place, amend the Mortgage Loan Schedule to reflect the
withdrawal of the Deleted Mortgage Loan from this Agreement, and, in the case
of substitution, identify a Qualified Substitute Mortgage Loan and amend the
Mortgage Loan Schedule to reflect the addition of such Qualified Substitute
Mortgage Loan to this Agreement. In connection with any such substitution,
the Company shall be deemed to have made as to such Qualified Substitute
Mortgage Loan the representations and warranties set forth in this Agreement
except that all such representations and warranties set forth in this
Agreement shall be deemed made as of the date of such substitution. The
Company shall effect such substitution by delivering to the Custodian for
such Qualified Substitute Mortgage Loan the related Mortgage Loan Documents
with the Mortgage Note endorsed as required. No substitution will be made in
any calendar month after the Determination Date for such month. The Company
shall deposit in the Custodial Account the Monthly Payment less the Servicing
Fee due on such Qualified Substitute Mortgage Loan or Loans in the month
following the date of such substitution. Monthly Payments due with respect
to Qualified Substitute Mortgage Loans in the month of substitution shall be
retained by the Company. For the month of substitution, distributions to
Purchaser shall include the Monthly Payment due on any Deleted Mortgage Loan
in the month of substitution. The Company shall thereafter be entitled to
retain all amounts subsequently received by the Company in respect of such
Deleted Mortgage Loan.
For any month in which the Company substitutes a Qualified Substitute
Mortgage Loan for a Deleted Mortgage Loan the Company shall determine the
amount (if any) by which the aggregate principal balance of all Qualified
Substitute Mortgage Loans as of the date of substitution is less than the
aggregate Stated Principal Balance of all Deleted Mortgage Loans (after
application of scheduled principal payments due in the month of
substitution). The amount of such shortfall shall be distributed by the
Company in the month of substitution pursuant to Section 5.01. Accordingly,
on the date of such substitution, the Company shall deposit from its own
funds into the Custodial Account an amount equal to the amount of such
shortfall.
In addition to such repurchase or substitution obligation, the Company
shall indemnify the Purchaser and hold it harmless against any losses,
damages, penalties, fines, forfeitures, reasonable and necessary legal fees
and related costs, judgments, and other costs and expenses resulting from any
claim, demand, defense or assertion based on or grounded upon or resulting
from a breach of the Company's representations and warranties contained in
this Agreement. It is understood and agreed that the obligations of the
Company set forth in this Section 3.03 to cure, substitute for or repurchase
a defective Mortgage Loan and to indemnify the Purchaser as provided in this
Section 3.03 constitute the sole remedies of the Purchaser respecting a
breach of the foregoing representations and warranties.
Any cause of action against the Company relating to or arising out of
the breach of any representations and warranties made in Section 3.01 and
3.02 shall accrue as to any Mortgage Loan upon (i) discovery of such breach
by the Purchaser or notice thereof by the Company to the Purchaser, (ii)
failure by the Company to cure such breach or repurchase such Mortgage Loan
as specified above, and (iii) demand upon the Company by the Purchaser for
compliance with this Agreement.
Section 3.04 Mortgage Loans Convertible to Fixed Interest Rate.
-------------------------------------------------
In the event the Mortgagor under any Convertible Mortgage Loan elects to
convert said Mortgage Loan to a fixed interest rate Mortgage Loan, as
provided in the related Mortgage Note, then the Company shall repurchase such
Mortgage Loan at the Repurchase Price or substitute in its place a Qualified
Substitute Mortgage Loan or Loans in the manner prescribed in Section 3.03.
ARTICLE IV
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
----------------------------------------------
Section 4.01 Company to Act as Servicer.
--------------------------
The Company, as an independent contractor, shall service and administer
the Mortgage Loans and shall have full power and authority, acting alone, to
do any and all things in connection with such servicing and administration
which the Company may deem necessary or desirable, consistent with the terms
of this Agreement and with Accepted Servicing Practices.
Consistent with the terms of this Agreement, the Company may waive any
late payment charge, assumption fee or other fee that may be collected in the
ordinary course of servicing the Mortgage Loans. The Company shall not make
any future advances with respect to a Mortgage Loan and (unless the Mortgagor
is in default with respect to the Mortgage Loan or such default is, in the
judgment of the Company, imminent) the Company shall not permit any
modification of any material term of any Mortgage Loan, including any
modification that would change the Mortgage Interest Rate, defer or forgive
the payment of principal or interest, reduce or increase the outstanding
principal balance (except for actual payments of principal) or change the
final maturity date on such Mortgage Loan, unless approved by Purchaser on a
Mortgage Loan-by-Mortgage Loan basis (which approval shall not be
unreasonably withheld, conditioned or delayed), or unless pursuant to a loan
modification program previously presented to and approved by the Purchaser.
In the event of any such modification which permits the deferral of interest
or principal payments on any Mortgage Loan, the Company shall, on the
Business Day immediately preceding the Remittance Date in any month in which
any such principal or interest payment has been deferred, deposit in the
Custodial Account from its own funds, in accordance with Section 5.03, the
difference between (a) such month's principal and one month's interest at the
Mortgage Loan Remittance Rate on the unpaid principal balance of such
Mortgage Loan and (b) the amount paid by the Mortgagor. The Company shall be
entitled to reimbursement for such advances to the same extent as for all
other advances made pursuant to Section 5.03. Without limiting the
generality of the foregoing, the Company shall continue, and is hereby
authorized and empowered, to execute, deliver and record (if appropriate) on
behalf of itself and the Purchaser, all instruments of satisfaction or
cancellation, or of partial or full release, discharge and all other
comparable instruments and any other certificate or instrument necessary to
carry out the modifications contemplated by this Section 4.01, with respect
to the Mortgage Loans and with respect to the Mortgaged Properties.
Purchaser hereby acknowledges that the modifications to the Mortgage Loan
Documents set forth in Exhibit N hereto are not material modifications for
---------
which Purchaser's consent would be required hereunder. Upon the request of
the Company, the Purchaser shall furnish the Company with any powers of
attorney and other documents reasonably required by the Company which are
necessary or appropriate to enable the Company to carry out its servicing
and administrative duties under this Agreement.
In the event that foreclosure proceedings are commenced in respect of
any Mortgage Loan as to which Additional Collateral has been pledged as
security, the Company shall, if such Additional Collateral is readily
marketable, immediately commence the liquidation of such collateral. The
proceeds of such sale shall be promptly deposited in the Custodial Account.
If such Additional Collateral is not readily marketable, the Company shall
not exercise any right it may have to seize, convert or otherwise assume
ownership of such Additional Collateral.
In servicing and administering the Mortgage Loans, the Company shall
employ procedures (including collection procedures) and exercise the same
care that it customarily employs and exercises in servicing and administering
mortgage loans for its own account, giving due consideration to Accepted
Servicing Practices where such practices do not conflict with the
requirements of this Agreement, and the Purchaser's reliance on the Company.
The Mortgage Loans may be subserviced by the Subservicer, in accordance
with the servicing provisions of this Agreement, on behalf of the Company,
provided that the Subservicer is a FNMA-approved lender or a FHLMC
seller/servicer in good standing, and no event has occurred, including but
not limited to a change in insurance coverage, which would make it unable to
comply with the eligibility requirements for lenders imposed by FNMA or for
seller/servicers imposed by FHLMC, or which would require notification to
FNMA or FHLMC. The Company may perform any of its servicing responsibilities
hereunder or may cause the Subservicer to perform any such servicing
responsibilities on its behalf, but the use by the Company of the Subservicer
shall not release the Company from any of its obligations hereunder and the
Company shall remain responsible hereunder for all acts and omissions of the
Subservicer as fully as if such acts and omissions were those of the Company.
The Company shall pay all fees and expenses of the Subservicer from its own
funds, and the Subservicer's fee shall not exceed the Servicing Fee.
References in this Agreement to performance by the Company of its
servicing responsibilities hereunder shall be deemed to include the
Subservicer acting on behalf of the Company.
At the cost and expense of the Company, without any right of
reimbursement from the Custodial Account, the Company shall be entitled to
terminate the rights and responsibilities of the Subservicer and arrange for
any servicing responsibilities to be performed by a successor Subservicer
meeting the requirements in the two preceding paragraphs; provided, however,
that nothing contained herein shall be deemed to prevent or prohibit the
Company, at the Company's option, from electing to service the related
Mortgage Loans itself. In the event that the Company's responsibilities and
duties under this Agreement are terminated pursuant to Section 8.04, 9.01,
10.01 or 10.02 , and if requested to do so by the Purchaser, the Company
shall at its own cost and expense terminate the rights and responsibilities
of the Subservicer as soon as is reasonably possible. The Company shall pay
all fees, expenses or penalties necessary in order to terminate the rights
and responsibilities of the Subservicer from the Company's own funds without
reimbursement from the Purchaser.
Notwithstanding any of the provisions of this Agreement relating to
agreements or arrangements between the Company and the Subservicer or any
reference herein to action taken though the Subservicer or otherwise, the
Company shall not be relieved of its obligations to the Purchaser and shall
be obligated to the same extent and under the same terms and conditions as if
it alone were servicing and administering the Mortgage Loans. The Company
shall be entitled to enter into an agreement with the Subservicer for
indemnification of the Company by the Subservicer and nothing contained in
this Agreement shall be deemed to limit or modify such indemnification.
Any Subservicing Agreement and any other transactions or services
relating to the Mortgage Loans involving the Subservicer shall be deemed to
be between the Subservicer and Company alone, and the Purchaser shall have no
obligations, duties or liabilities with respect to the Subservicer including
no obligation, duty or liability of Purchaser to pay the Subservicer's fees
and expenses. For purposes of distributions and advances by the Company
pursuant to this Agreement, the Company shall be deemed to have received a
payment or other recovery in respect of a Mortgage Loan when the Subservicer
has received such payment or recovery.
Section 4.02 Liquidation of Mortgage Loans.
-----------------------------
In the event that any payment due under any Mortgage Loan and not
postponed pursuant to Section 4.01 is not paid when the same becomes due and
payable, or in the event the Mortgagor fails to perform any other covenant or
obligation under the Mortgage Loan and such failure continues beyond any
applicable grace period, the Company shall take such action as (1) the
Company would take under similar circumstances with respect to a similar
mortgage loan held for its own account for investment, (2) shall be
consistent with Accepted Servicing Practices, and (3) the Company shall
determine prudently to be in the best interest of Purchaser. In the event
that any payment due under any Mortgage Loan is not postponed pursuant to
Section 4.01 and remains delinquent for a period of ninety (90) days or any
other default continues for a period of ninety (90) days beyond the
expiration of any grace or cure period, the Company shall commence
foreclosure proceedings, provided that, prior to commencing foreclosure
proceedings, the Company shall notify the Purchaser in writing of the
Company's intention to do so, and the Company shall not commence foreclosure
proceedings if the Purchaser objects to such action within ten (10) Business
Days of receiving such notice. The Company's obligation to make such Monthly
Advances shall terminate upon delivery by the Company to the Purchaser of a
Certificate of Nonrecoverable Advance in the form set forth in Exhibit M.
---------
Notwithstanding anything to the contrary contained herein, in connection
with a foreclosure or acceptance of a deed in lieu of foreclosure, in the
event the Company has reasonable cause to believe that a Mortgaged Property
is contaminated by hazardous or toxic substances or wastes, or if the
Purchaser otherwise requests an environmental inspection, a review of such
Mortgaged Property shall be conducted by a qualified inspector. Upon
completion of the inspection, the Company shall promptly provide the
Purchaser with a written report of the environmental inspection.
In the event that the environmental inspection report indicates that the
Mortgaged Property is contaminated by hazardous or toxic substances or
wastes, the Company shall not proceed with foreclosure or acceptance of a
deed in lieu of foreclosure, and the Company shall be reimbursed for all
Servicing Advances made with respect to the related Mortgaged Property from
the Custodial Account pursuant to Section 4.05 hereof.
Section 4.03 Collection of Mortgage Loan Payments.
------------------------------------
Continuously from the date hereof until the principal and interest on
all Mortgage Loans are paid in full, the Company shall proceed diligently to
collect all payments due under each of the Mortgage Loans when the same shall
become due and payable and shall take special care in ascertaining and
estimating Escrow Payments and all other charges that will become due and
payable with respect to the Mortgage Loan and the Mortgaged Property, to the
end that the installments payable by the Mortgagor will be sufficient to pay
such charges as and when they become due and payable.
Section 4.04 Establishment of and Deposits to Custodial Account.
--------------------------------------------------
The Company shall segregate and hold all funds collected and received
pursuant to a Mortgage Loan separate and apart from any of its own funds and
general assets and shall establish and maintain one or more Custodial
Accounts, in the form of time deposit or demand accounts, titled "Boston Safe
Deposit and Trust Company in trust for Norwest Bank Minnesota, N.A., as
Trustee, Structured Asset Securities Corporation Mortgage Pass-Through
Certificates, Series 1997-1," or such other designation as the Purchaser may
direct. The Custodial Account shall be established with a Qualified
Depository. Any funds deposited in the Custodial Account shall at all times
be fully insured to the full extent permitted under applicable law. Funds
deposited in the Custodial Account may be drawn on by the Company in
accordance with Section 4.05. The creation of any Custodial Account shall be
evidenced by a certification in the form of Exhibit D-1 hereto, in the
-----------
case of an account established with the Company, or by a letter agreement in
the form of Exhibit D-2 hereto, in the case of an account held by a
-----------
depository other than the Company. A copy of such certification or letter
agreement shall be furnished to the Purchaser and, upon request, to any
subsequent Purchaser.
Funds in a Custodial Account may be invested in Eligible Investments (as
defined in the Trust Agreement) which shall mature not later than the earlier
of the Business Day immediately preceding the next succeeding Remittance
Date, and such investments shall not be sold or disposed of prior to their
maturity. All income and gain realized from any investment shall be for the
benefit of the Company and shall be subject to its withdrawal or order. The
amount of any losses incurred in respect of any such investments shall be
deposited in the related Custodial Account by the Company out of its own
funds immediately as such loss is realized.
The Company shall deposit in the Custodial Account on a daily basis, as
received, and retain therein, the following collections received by the
Company and payments made by the Company after the Cut-off Date, other than
payments of principal and interest due on or before the Cut-off Date:
(i) all payments on account of principal on the Mortgage Loans,
including all Principal Prepayments;
(ii) all payments on account of interest on the Mortgage Loans adjusted
to the Mortgage Loan Remittance Rate;
(iii) all Liquidation Proceeds;
(iv) all Insurance Proceeds including amounts required to be deposited
pursuant to Section 4.10 (other than proceeds to be held in the Escrow
Account and applied to the restoration or repair of the Mortgaged Property or
released to the Mortgagor in accordance with Section 4.14) and Section 4.11;
(v) all Condemnation Proceeds which are not applied to the restoration
or repair of the Mortgaged Property or released to the Mortgagor in
accordance with Section 4.14;
(vi) any amount required to be deposited in the Custodial Account
pursuant to Section 4.01, 4.04, 5.03, 6.01 or 6.02;
(vii) any amounts payable in connection with the repurchase of any
Mortgage Loan pursuant to Section 3.03 and all amounts required to be
deposited by the Company in connection with a shortfall in principal amount
of any Qualified Substitute Mortgage Loan pursuant to Section 3.03;
(viii) with respect to each Principal Prepayment received during the
immediately preceding Principal Prepayment Period, an amount (to be paid by
the Company out of its funds as provided in Section 6.03 hereof) which, when
added to all amounts allocable to interest received in connection with such
Principal Prepayment, equals one month's interest on the amount of principal
so prepaid at the Mortgage Loan Remittance Rate, the aggregate of such
payments by the Company for any month not to exceed the aggregate of the
Company's Servicing Fees for such month.
(ix) any amounts required to be deposited by the Company pursuant to
Section 4.11 in connection with the deductible clause in any blanket hazard
insurance policy; and
(x) any amounts received with respect to or related to any REO Property
and all REO Disposition Proceeds pursuant to Section 4.15.
The foregoing requirements for deposit into the Custodial Account shall
be exclusive, it being understood and agreed that, without limiting the
generality of the foregoing, payments in the nature of late payment charges
and assumption fees, to the extent permitted by Section 6.01, need not be
deposited by the Company into the Custodial Account. Any interest paid on
funds deposited in the Custodial Account by the depository institution shall
accrue to the benefit of the Company and the Company shall be entitled to
retain and withdraw such interest from the Custodial Account pursuant to
Section 4.05.
Section 4.05 Permitted Withdrawals From Custodial Account.
--------------------------------------------
The Company shall, from time to time, withdraw funds from the Custodial
Account for the following purposes:
(i) to make payments to the Purchaser in the amounts and in the manner
provided for in Section 5.01;
(ii) to reimburse itself for Monthly Advances of the Company's funds
made pursuant to Section 5.03, the Company's right to reimburse itself
pursuant to this subclause (ii) being limited to amounts received with
respect to the related Mortgage Loan which represent late payments of
principal and/or interest respecting which any such advance was made, it
being understood that, in the case of any such reimbursement, the Company's
right thereto shall be prior to the rights of the Purchaser, except that,
where the Company is required to repurchase a Mortgage Loan pursuant to
Section 3.03 or 6.02, the Company's right to such reimbursement shall be
subsequent to the payment to the Purchaser of the Repurchase Price pursuant
to such sections and all other amounts required to be paid to the Purchaser
with respect to such Mortgage Loan;
(iii) to reimburse itself for unreimbursed Servicing Advances, and
for any unpaid Servicing Fees, the Company's right to reimburse itself
pursuant to this subclause (iii) with respect to any Mortgage Loan being
limited to related Liquidation Proceeds, Condemnation Proceeds, Insurance
Proceeds and such other amounts as may be collected by the Company from the
Mortgagor or otherwise relating to the Mortgage Loan, it being understood
that, in the case of any such reimbursement, the Company's right thereto
shall be prior to the rights of Purchaser except where the Company is
required to repurchase a Mortgage Loan pursuant to Section 3.03 or 6.02, in
which case the Company's right to such reimbursement shall be subsequent to
the payment to the Purchaser of the Repurchase Price pursuant to such
sections and all other amounts required to be paid to the Purchaser with
respect to such Mortgage Loan;
(iv) to pay itself investment earnings on funds deposited in the
Custodial Account;
(v) to reimburse itself for expenses incurred and reimbursable to it
pursuant to Sections 4.02 and 8.01;
(vi) to pay any amount required to be paid pursuant to Sections 4.02 and
4.15 related to any REO Property, it being understood that in the case of any
such expenditure or withdrawal related to a particular REO Property, the
amount of such expenditure or withdrawal from the Custodial Account shall be
limited to amounts on deposit in the Custodial Account with respect to the
related REO Property;
(vii) to withdraw funds deposited in error in the Custodial Account;
and
(viii) to clear and terminate the Custodial Account upon the
termination of this Agreement.
On each Remittance Date, the Company shall withdraw all funds from the
Custodial Account except for those amounts which, pursuant to Section 5.01,
the Company is not obligated to remit on such Remittance Date. The Company
may use such withdrawn funds only for the purposes described in this Section
4.05.
Section 4.06 Establishment of and Deposits to Escrow Account.
-----------------------------------------------
The Company shall segregate and hold all funds collected and received
pursuant to a Mortgage Loan constituting Escrow Payments separate and apart
from any of its own funds and general assets and shall establish and maintain
one or more Escrow Accounts, in the form of time deposit or demand accounts
titled, "Boston Safe Deposit and Trust Company, in trust for Norwest Bank
Minnesota, N.A., as Trustee, Structured Asset Securities Corporation Mortgage
Pass-Through Certificates, Series 1997-1," or such other designation as the
Purchaser may direct. The Escrow Account shall be established with a
Qualified Depository, in a manner which shall provide maximum available
insurance thereunder. Funds deposited in the Escrow Account may be drawn on
by the Company in accordance with Section 4.07. The creation of any Escrow
Account shall be evidenced by a certification in the form of Exhibit E-1
-----------
hereto, in the case of an account established with the Company, or by a
letter agreement in the form of Exhibit E-2 hereto, in the case of an
-----------
account held by a depository other than the Company. A copy of such
certification shall be furnished to the Purchaser and, upon request, to
any subsequent Purchaser.
The Company shall deposit in the Escrow Account or Accounts on a daily
basis, and retain therein:
(i) all Escrow Payments collected on account of the Mortgage Loans, for
the purpose of effecting timely payment of any such items as required under
the terms of this Agreement; and
(ii) all amounts representing Insurance Proceeds or Condemnation
Proceeds which are to be applied to the restoration or repair of any
Mortgaged Property.
The Company shall make withdrawals from the Escrow Account only to
effect such payments as are required or permitted under this Agreement, as
set forth in Section 4.07. The Company shall be entitled to retain any
interest paid on funds deposited in the Escrow Account by the depository
institution, other than interest on escrowed funds required by law to be paid
to the Mortgagor. To the extent required by law, the Company shall pay
interest on escrowed funds to the Mortgagor notwithstanding that the Escrow
Account may be non-interest bearing or that interest paid thereon is
insufficient for such purposes.
Section 4.07 Permitted Withdrawals From Escrow Account.
-----------------------------------------
Withdrawals from the Escrow Account or Accounts may be made by the
Company only:
(i) to effect timely payments of ground rents, taxes, assessments,
water rates, mortgage insurance premiums, condominium charges, fire, flood
and hazard insurance premiums or other items constituting Escrow Payments for
the related Mortgage;
(ii) to reimburse the Company for any Servicing Advances made by the
Company pursuant to Section 4.08 with respect to a related Mortgage Loan, but
only from amounts received on the related Mortgage Loan which represent late
collections of Escrow Payments thereunder;
(iii) to refund to any Mortgagor any funds found to be in excess of
the amounts required under the terms of the related Mortgage Loan;
(iv) for transfer to the Custodial Account and application to reduce the
principal balance of the Mortgage Loan in accordance with the terms of the
related Mortgage and Mortgage Note;
(v) for application to restoration or repair of the Mortgaged Property
in accordance with the procedures outlined in Section 4.14;
(vi) to pay to the Company, or any Mortgagor to the extent required by
law, any interest paid on the funds deposited in the Escrow Account;
(vii) to withdraw funds deposited in error in the Escrow Account;
and
(viii) to clear and terminate the Escrow Account on the termination
of this Agreement.
Section 4.08 Maintenance of Tax, Insurance, Other Charge Records.
---------------------------------------------------
With respect to each Mortgage Loan, the Company shall maintain accurate
records reflecting the status of ground rents, taxes, assessments, water
rates, sewer rents, and the charges which are or may become a lien upon the
Mortgaged Property and the status of fire, flood and hazard insurance
coverage and shall obtain, from time to time, all bills for the payment of
such charges (including renewal premiums) and shall effect payment thereof
prior to the applicable penalty or termination date, employing for such
purpose deposits of the Mortgagor in the Escrow Account which shall have been
estimated and accumulated by the Company in amounts sufficient for such
purposes, as allowed under the terms of the Mortgage. To the extent that a
Mortgage does not provide for Escrow Payments, the Company shall make a
Servicing Advance from its own funds to effect such payment upon notice that
payment of such amounts is due and unpaid.
Section 4.09 Protection of Accounts.
----------------------
The Company may transfer the Custodial Account or the Escrow Account to
a different Qualified Depository from time to time. Such transfer shall be
made only upon obtaining the consent of the Purchaser, which consent shall
not be withheld unreasonably.
The Company shall bear any expenses, losses or damages sustained by the
Purchaser because the Custodial Account or Escrow Account is not a demand
deposit account.
Section 4.10 Maintenance of Hazard Insurance.
-------------------------------
The Company shall cause to be maintained for each Mortgage Loan hazard
insurance such that all buildings upon the Mortgaged Property are insured by
an insurer that satisfies the requirements of FNMA or FHLMC against loss by
fire, hazards of extended coverage and such other hazards as are customary in
the area where the Mortgaged Property is located, in an amount which is at
least equal to the lesser of (i) the maximum insurable value of the
improvements securing such Mortgage Loan and (ii) the greater of (a) the
outstanding principal balance of the Mortgage Loan and (b) an amount such
that the proceeds thereof shall be sufficient to prevent the Mortgagor or the
loss payee from becoming a co-insurer.
If upon origination of the Mortgage Loan, the related Mortgaged Property
was located in an area identified in the Federal Register by the Flood
Emergency Management Agency as having special flood hazards (and such flood
insurance has been made available) a flood insurance policy meeting the
requirements of the current guidelines of the Federal Flood Insurance
Administration is in effect with a generally acceptable insurance carrier in
an amount representing coverage equal to the lesser of (i) the minimum
amount required, under the terms of coverage, to compensate for any damage or
loss on a replacement-cost basis or the unpaid balance of the Mortgage Loan
if replacement coverage is not available for the type of building insured)
and (ii) the maximum amount of insurance which is available under the Flood
Disaster Protection Act of 1973, as amended.
If a Mortgage is secured by a unit in a condominium, the Company shall
have received a certificate of insurance evidencing a master policy held by
the owner's association and naming the Company as loss payee.
In the event that the Purchaser or the Company shall determine that the
Mortgaged Property (or, in the case of a Cooperative Loan, the related
Cooperative Unit) should be insured against loss or damage by hazards and
risks not covered by the insurance required to be maintained by the Mortgagor
pursuant to the terms of the Mortgage, the Company shall communicate and
consult with the Mortgagor with respect to the need for such insurance and
bring to the Mortgagor's attention the desirability of protection of the
Mortgaged Property.
All policies required hereunder shall name the Company as loss payee and
shall be endorsed with standard mortgagee clauses, which shall provide for at
least 30 days' prior written notice of any cancellation, reduction in amount
or material change in coverage.
The Company shall not interfere with the Mortgagor's freedom of choice
in selecting either his insurance carrier or agent; provided, however, that
the Company shall not accept any such insurance policies from insurance
companies unless such companies satisfy the requirements of FNMA and FHLMC
and are licensed to do business in the jurisdiction in which the Mortgaged
Property is located. The Company shall determine that such policies provide
sufficient risk coverage and amounts, that they insure the property owner,
and that they properly describe the property address. The Company shall
furnish to the Mortgagor a formal notice of expiration of any such insurance
in sufficient time for the Mortgagor to arrange for renewal coverage by the
expiration date.
Pursuant to Section 4.04, any amounts collected by the Company under any
such policies (other than amounts to be deposited in the Escrow Account and
applied to the restoration or repair of the related Mortgaged Property (or,
in the case of a Cooperative Loan, the related Cooperative Unit), or property
acquired in liquidation of the Mortgage Loan, or to be released to the
Mortgagor, in accordance with the Company's normal servicing procedures as
specified in Section 4.14) shall be deposited in the Custodial Account
subject to withdrawal pursuant to Section 4.05.
Section 4.11 Maintenance of Mortgage Impairment Insurance.
--------------------------------------------
The Company shall maintain a blanket policy insuring against losses
arising from fire and hazards covered under extended coverage on any or all
of the Mortgage Loans and, to the extent such policy provides coverage in an
amount equal to the amount required pursuant to Section 4.10 and otherwise
complies with all other requirements of Section 4.10, it shall conclusively
be deemed to have satisfied its obligations as set forth in Section 4.10.
Any amounts collected by the Company under any such policy relating to a
Mortgage Loan shall be deposited in the Custodial Account subject to
withdrawal pursuant to Section 4.05. Such policy may contain a deductible
clause, in which case, in the event that there shall not have been maintained
on the related Mortgaged Property a policy complying with Section 4.10, and
there shall have been a loss which would have been covered by such policy,
the Company shall deposit in the Custodial Account at the time of such loss
the amount not otherwise payable under the blanket policy because of such
deductible clause, such amount to deposited from the Company's funds, without
reimbursement therefor. Upon request of the Purchaser, the Company shall
cause to be delivered to such Purchaser a certified true copy of such policy
and a statement from the insurer thereunder that such policy shall in no
event be terminated or materially modified without thirty (30) days' prior
written notice to the Purchaser.
Section 4.12 Maintenance of Fidelity Bond and Errors and Omissions
-----------------------------------------------------
Insurance.
---------
The Company or its corporate parent shall maintain on behalf of the
Company with responsible companies, at its own expense, a blanket Fidelity
Bond and an Errors and Omissions Insurance Policy, with broad coverage on all
officers, employees or other persons acting in any capacity requiring such
persons to handle funds, money, documents or papers relating to the Mortgage
Loans ("Company Employees"). Any such Fidelity Bond and Errors and Omissions
Insurance Policy shall be in the form of the Mortgage Banker's Blanket Bond
and shall protect and insure the Company against losses, including forgery,
theft, embezzlement, fraud, errors and omissions and negligent acts of such
Company Employees. Such Fidelity Bond and Errors and Omissions Insurance
Policy also shall protect and insure the Company against losses in connection
with the release or satisfaction of a Mortgage Loan without having obtained
payment in full of the indebtedness secured thereby. No provision of this
Section 4.12 requiring such Fidelity Bond and Errors and Omissions Insurance
Policy shall diminish or relieve the Company from its duties and obligations
as set forth in this Agreement. The minimum coverage under any such bond and
insurance policy shall be at least equal to the corresponding amounts
required by FNMA in the FNMA Mortgage-Backed Securities Selling and Servicing
Guide or by FHLMC in the FHLMC Sellers' & Servicers' Guide. Upon the request
of the Purchaser, the Company shall cause to be delivered to the Purchaser a
certified true copy of such fidelity bond and insurance policy and a
statement from the surety and the insurer that such fidelity bond and
insurance policy shall in no event be terminated or materially modified
without thirty (30) days' prior written notice to the Purchaser.
Section 4.13 Inspections.
-----------
The Company shall inspect the Mortgaged Property as often as deemed
necessary by the Company to assure itself that the value of the Mortgaged
Property is being preserved. In addition, if any Mortgage Loan is more than
sixty (60) days delinquent, the Company immediately shall inspect the
Mortgaged Property and shall conduct subsequent inspections in accordance
with Accepted Servicing Practices or as may be required by the primary
mortgage guaranty insurer. The Company shall keep a written report of each
such inspection.
Section 4.14 Restoration of Mortgaged Property.
---------------------------------
The Company need not obtain the approval of the Purchaser prior to
releasing any Insurance Proceeds or Condemnation Proceeds to the Mortgagor to
be applied to the restoration or repair of the Mortgaged Property if such
release is in accordance with Accepted Servicing Practices. At a minimum,
the Company shall comply with the following conditions in connection with any
such release of Insurance Proceeds or Condemnation Proceeds:
(i) the Company shall receive satisfactory independent verification of
completion of repairs and issuance of any required approvals with respect
thereto;
(ii) the Company shall take all steps necessary to preserve the priority
of the lien of the Mortgage, including, but not limited to requiring waivers
with respect to mechanics' and materialmen's liens; and
(iii) pending repairs or restoration, the Company shall place the
Insurance Proceeds or Condemnation Proceeds in the Escrow Account.
If the Purchaser is named as an additional loss payee, the Company is
hereby empowered to endorse any loss draft issued in respect of such a claim
in the name of the Purchaser.
Section 4.15 Title, Management and Disposition of REO Property.
-------------------------------------------------
In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of
sale shall be taken in the name of the Purchaser, or in the event the
Purchaser is not authorized or permitted to hold title to real property in
the state where the REO Property is located, or would be adversely affected
under the "doing business" or tax laws of such state by so holding title, the
deed or certificate of sale shall be taken in the name of such Person or
Persons as shall be consistent with an Opinion of Counsel obtained by the
Company from any attorney duly licensed to practice law in the state where
the REO Property is located. The Person or Persons holding such title other
than the Purchaser shall acknowledge in writing that such title is being held
as nominee for the Purchaser.
The Company shall manage, conserve, protect and operate each REO
Property for the Purchaser solely for the purpose of its prompt disposition
and sale. The Company, either itself or through an agent selected by the
Company, shall manage, conserve, protect and operate the REO Property in the
same manner that it manages, conserves, protects and operates other
foreclosed property for its own account, and in the same manner that similar
property in the same locality as the REO Property is managed. The Company
shall attempt to sell the same (and may temporarily rent the same for a
period not greater than one year, except as otherwise provided below) on such
terms and conditions as the Company deems to be in the best interest of the
Purchaser.
The Company shall use its best efforts to dispose of the REO Property as
soon as possible and shall sell such REO Property in any event within two
years after title has been taken to such REO Property, unless (i) the
Purchaser shall have been supplied with an Opinion of Counsel to the effect
that the holding by the Trust of such Mortgaged Property subsequent to such
two-year period (and specifying the period beyond such two-year period for
which the Mortgaged Property may be held) will not result in the imposition
of taxes on "prohibited transactions" of the Trust as defined in Section 860F
of the Code, or cause the related REMIC to fail to qualify as a REMIC, in
which case the Trust may continue to hold such Mortgaged Property (subject to
any conditions contained in such Opinion of Counsel), or (ii) the Purchaser
(at the Company's expense) or the Company shall have applied for, prior to
the expiration of such two-year period, an extension of such two-year period
in the manner contemplated by Section 856(e)(3) of the Code, in which case
the two-year period shall be extended by the applicable period. If a period
longer than two years is permitted under the foregoing sentence and is
necessary to sell any REO Property, (i) the Company shall report monthly to
the Purchaser as to progress being made in selling such REO Property and (ii)
if, with the written consent of the Purchaser, a purchase money mortgage is
taken in connection with such sale, such purchase money mortgage shall name
the Company as mortgagee, and such purchase money mortgage shall not be held
pursuant to this Agreement, but instead a separate participation agreement
between the Company and Purchaser shall be entered into with respect to such
purchase money mortgage.
Notwithstanding any other provision of this Agreement, no Mortgaged
Property held by a REMIC shall be rented (or allowed to continue to be
rented) or otherwise used for the production of income by or on behalf of the
Trust or sold in such a manner or pursuant to any terms that would (i) cause
such Mortgaged Property to fail to qualify at any time as "foreclosure
property" within a meaning of section 860G(a)(8) of the Code, (ii) subject
the Trust to the imposition of any federal or state income taxes on "net
income from foreclosure property" with respect to such Mortgaged Property
within the meaning of section 860G(c) of the Code, or (iii) cause the sale of
such Mortgaged Property to result in the receipt by the Trust or any income
from non-permitted assets as described in section 860F(a) (2)(B) of the Code,
unless the Company has agreed to indemnify and hold harmless the Trust with
respect to the imposition of any such taxes.
The Company shall also maintain on each REO Property fire and hazard
insurance with extended coverage in an amount which is at least equal to the
maximum insurable value of the improvements which are part of such property,
liability insurance and, to the extent required and available under the Flood
Disaster Protection Act of 1973, as amended, flood insurance in the amount
required above.
The disposition of REO Property shall be carried out by the Company at
such price, and upon such terms and conditions, as the Company deems to be in
the best interests of the Purchaser. The proceeds of sale of the REO
Property shall be promptly deposited in the Custodial Account. As soon as
practical thereafter, the expenses of such sale shall be paid and the Company
shall reimburse itself for any related unreimbursed Servicing Advances,
unpaid Servicing Fees and unreimbursed Monthly Advances made pursuant to
Section 5.03, and on the Remittance Date immediately following the Principal
Prepayment Period in which such sale proceeds are received the net cash
proceeds of such sale remaining in the Custodial Account shall be distributed
to the Purchaser.
The Company shall withdraw from the Custodial Account funds necessary
for the proper operation, management and maintenance of each REO Property,
including the cost of maintaining any hazard insurance pursuant to Section
4.10 and the fees of any managing agent of the Company, a Subservicer, or the
Company itself. The REO management fee shall be an amount that is reasonable
and customary in the area where the Mortgaged Property is located. The
Company shall make monthly distributions on each Remittance Date to the
Purchaser of the net cash flow from the REO Property (which shall equal the
revenues from such REO Property net of the expenses described in this Section
4.15 and of any reserves reasonably required from time to time to be
maintained to satisfy anticipated liabilities for such expenses).
Section 4.16 Real Estate Owned Reports.
-------------------------
Together with the statement furnished pursuant to Section 5.02, the
Company shall furnish to the Purchaser on or before the Remittance Date each
month a statement with respect to any REO Property covering the operation of
such REO Property for the previous month and the Company's efforts in
connection with the sale of such REO Property and any rental of such REO
Property incidental to the sale thereof for the previous month. That
statement shall be accompanied by such other information as the Purchaser
shall reasonably request.
Section 4.17 Liquidation Reports.
-------------------
Upon the foreclosure sale of any Mortgaged Property or the acquisition
thereof by the Purchaser pursuant to a deed in lieu of foreclosure, the
Company shall submit to the Purchaser a liquidation report with respect to
such Mortgaged Property.
Section 4.18 Notification of Adjustments.
---------------------------
With respect to each Mortgage Loan, the Company shall adjust the
Mortgage Interest Rate on the related Interest Rate Adjustment Date in
compliance with requirements of applicable law and the related Mortgage and
Mortgage Note. The Company shall execute and deliver any and all necessary
notices required under applicable law and the terms of the related Mortgage
Note and Mortgage regarding the Mortgage Interest Rate adjustments. The
Company shall promptly, upon written request therefor, deliver to the
Purchaser such notifications and any additional applicable data regarding
such adjustments and the methods used to calculate and implement such
adjustments. Upon the discovery by the Company or the receipt of notice from
the Purchaser that the Company has failed to adjust a Mortgage Interest Rate
in accordance with the terms of the related Mortgage Note, the Company shall
immediately deposit in the Custodial Account from its own funds the amount of
any interest loss or deferral caused to the Purchaser thereby.
Section 4.19 Reports of Foreclosures and Abandonments of Mortgaged
-----------------------------------------------------
Property.
--------
Following the foreclosure sale or abandonment of any Mortgaged Property,
the Company shall report such foreclosure or abandonment as required pursuant
to Section 6050J of the Code.
ARTICLE V
PAYMENTS TO PURCHASER
---------------------
Section 5.01 Remittances.
-----------
On each Remittance Date the Company shall remit by wire transfer of
immediately available funds to the Purchaser the sum of (a) all amounts
deposited in the Custodial Account as of the close of business on the
Determination Date (net of charges against or withdrawals from the Custodial
Account pursuant to Section 4.05 ), (b) all amounts, if any, which the
Company is obligated to deposit into the Custodial Account pursuant to
Section 5.03, and (c) any amounts payable with respect to Qualified
Substitute Mortgage Loans, but not including, (i) any amounts attributable to
Principal Prepayments received after the immediately preceding Principal
Prepayment Period, (ii) any Liquidation Proceeds and Insurance Proceeds
received after the immediately preceding Prepayment Period, and (iii) any
amounts attributable to Monthly Payments collected but due on a Due Date or
Dates subsequent to the first day of the month of such Remittance Date, all
of which amounts together with any additional interest required to be
deposited into a Custodial Account in connection with a Principal Prepayment
in accordance with Section 4.04(viii), shall be remitted on the next
succeeding Remittance Date.
With respect to any remittance received by the Purchaser after the
second Business Day following the Remittance Date on which such payment was
due, the Company shall pay to the Purchaser interest on any such late payment
at an annual rate equal to the Prime Rate, adjusted as of the date of each
change, plus three (3) percentage points, but in no event greater than the
maximum amount permitted by applicable law. Such interest shall be deposited
in the Custodial Account by the Company on the date such late payment is made
and shall cover the period commencing with the day following such second
Business Day and ending with the Business Day on which such payment is made,
both inclusive. Such interest shall be remitted along with the distribution
payable on the next succeeding Remittance Date. The payment by the Company
of any such interest shall not be deemed an extension of time for payment or
a waiver of any Event of Default by the Company.
Section 5.02 Statements to Purchaser.
-----------------------
Not later than the Remittance Date, the Company shall furnish to the
Purchaser a Monthly Remittance Advice, with a trial balance report attached
thereto, in the form of Exhibit F annexed hereto as to the
---------
preceding remittance and the period ending on the preceding Determination
Date.
In addition, not more than sixty (60) days after the end of each
calendar year, the Company shall furnish to each Person who was a Purchaser
at any time during such calendar year an annual statement in accordance with
the requirements of applicable federal income tax law as to the aggregate of
remittances for the applicable portion of such year.
Such obligation of the Company shall be deemed to have been satisfied to
the extent that substantially comparable information shall be provided by the
Company pursuant to any requirements of the Code as from time to time are in
force.
The Company shall prepare and file any and all tax returns, information
statements or other filings relating to the period of time prior to the sale
of the Mortgage Loans by the Company to the Purchaser required to be
delivered to any governmental taxing authority pursuant to any applicable law
with respect to the Mortgage Loans. In addition, the Company shall provide
the Purchaser with such information concerning the Mortgage Loans as is
necessary for the Purchaser to prepare its federal income tax returns.
Section 5.03 Monthly Advances by Company.
---------------------------
On the Business Day immediately preceding each Remittance Date, the
Company shall deposit in the Custodial Account from its own funds an amount
equal to all Monthly Payments (with interest adjusted to the Mortgage Loan
Remittance Rate) which were due on the Mortgage Loans during the applicable
Due Period and which were delinquent at the close of business on the
immediately preceding Determination Date or which were deferred pursuant to
Section 4.01. The Company's obligation to make such Monthly Advances as to
any Mortgage Loan will continue through the last Monthly Payment due prior to
the payment in full of the Mortgage Loan, or until the Company deems a future
advance to be a Nonrecoverable Advance.
ARTICLE VI
GENERAL SERVICING PROCEDURES
----------------------------
Section 6.01 Transfers of Mortgaged Property.
--------------------------------
The Company shall use its best efforts to enforce any "due-on-sale"
provision contained in any Mortgage or Mortgage Note and to deny assumption
by the person to whom the Mortgaged Property has been or is about to be sold
whether by absolute conveyance or by contract of sale, and whether or not the
Mortgagor remains liable on the Mortgage and the Mortgage Note. When the
Mortgaged Property has been conveyed by the Mortgagor, the Company shall, to
the extent it has knowledge of such conveyance, exercise its right to
accelerate the maturity of such Mortgage Loan under the "due-on-sale" clause
applicable thereto; provided, however, that the Company shall not exercise
such rights if prohibited by law from doing so.
If the Company reasonably believes it is unable under applicable law to
enforce such "due-on-sale" clause, the Company shall enter into (i) an
assumption and modification agreement with the person to whom such property
has been conveyed, pursuant to which such person becomes liable under the
Mortgage Note and the original Mortgagor remains liable thereon or (ii) in
the event the Company is unable under applicable law to require that the
original Mortgagor remains liable under the Mortgage Note and the Company has
the prior consent of the primary mortgage guaranty insurer, a substitution of
liability agreement with the purchaser of the Mortgaged Property pursuant to
which the original Mortgagor is released from liability and the purchaser of
the Mortgaged Property is substituted as Mortgagor and becomes liable under
the Mortgage Note. If an assumption fee is collected by the Company for
entering into an assumption agreement, a portion of such fee, up to an amount
equal to one-half of one percent (0.5%) of the outstanding principal balance
of the related Mortgage Loan, will be retained by the Company as additional
servicing compensation, and any portion thereof in excess of one-half of one
percent (0.5%) shall be deposited in the Custodial Account for the benefit of
the Purchaser. In connection with any such assumption, neither the Mortgage
Interest Rate borne by the related Mortgage Note, the term of the Mortgage
Loan nor the outstanding principal amount of the Mortgage Loan shall be
changed.
To the extent that any Mortgage Loan is assumed, the Company shall
inquire diligently into the creditworthiness of the proposed transferee, and
shall use the Company's underwriting criteria, as set forth in the attachment
to the Purchase Price and Terms Letter. If the credit of the proposed
transferee does not meet such underwriting criteria, the Company diligently
shall, to the extent permitted by the Mortgage or the Mortgage Note and by
applicable law, accelerate the maturity of the Mortgage Loan.
Section 6.02 Satisfaction of Mortgages and Release of Mortgage
-------------------------------------------------
Files.
-----
Upon the payment in full of any Mortgage Loan, or the receipt by the
Company of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Company shall notify the Purchaser in the
Monthly Remittance Advice as provided in Section 5.02, and may request the
release of any Mortgage Loan Documents.
If (i) the Company satisfies or releases a Mortgage without first having
obtained payment in full of the indebtedness secured by the Mortgage or
should the Company otherwise prejudice any rights the Purchaser may have
under the mortgage instruments, upon written demand of the Purchaser, the
Company shall repurchase the related Mortgage Loan at the Repurchase Price by
deposit thereof in the Custodial Account within two (2) Business Days of
receipt of such demand by the Purchaser. The Company shall maintain the
Fidelity Bond and Errors and Omissions Insurance Policy as provided for in
Section 4.12 insuring the Company against any loss it may sustain with
respect to any Mortgage Loan not satisfied in accordance with the procedures
set forth herein.
Section 6.03 Servicing Compensation.
----------------------
As compensation for its services hereunder, the Company shall be
entitled to withdraw from the Custodial Account or to retain from interest
payments on the Mortgage Loans the amount of its Servicing Fee. The
Servicing Fee shall be payable monthly and shall be computed on the basis of
the same unpaid principal balance and for the same period with respect to
which any related interest payment on a Mortgage Loan is computed. The
Servicing Fee shall be payable only at the time of and with respect to those
Mortgage Loans for which payment is in fact made of the entire amount of the
Monthly Payment. The obligation of the Purchaser to pay the Servicing Fee is
limited to, and payable solely from, the interest portion of such Monthly
Payments collected by the Company. The aggregate of the Servicing Fees for
any months with respect to the Mortgage Loans shall be reduced by any amount
payable by the Company with respect to such month pursuant to Section
4.04(viii).
Additional servicing compensation in the form of assumption fees, to the
extent provided in Section 6.01, and late payment charges shall be retained
by the Company to the extent not required to be deposited in the Custodial
Account. The Company shall be required to pay all expenses incurred by it in
connection with its servicing activities hereunder and shall not be entitled
to reimbursement thereof except as specifically provided for herein.
Section 6.04 Annual Statement as to Compliance.
---------------------------------
The Company shall deliver to the Purchaser, on or before March 31st each
year beginning March 31, 1997, an Officer's Certificate, stating that (i) a
review of the activities of the Company during the preceding calendar year
and of performance under this Agreement has been made under such officer's
supervision, and (ii) the Company has complied fully with the provisions of
Article II and Article IV, and (iii) to the best of such officer's knowledge,
based on such review, the Company has fulfilled all of its obligations under
this Agreement throughout such year, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to
such officer and the nature and status thereof and the action being taken by
the Company to cure such default.
Section 6.05 Annual Independent Public Accountants' Servicing
------------------------------------------------
Report.
------
On or before March 31st of each year beginning March 31, 1997, the
Company, at its expense, shall cause a firm of independent public accountants
which is a member of the American Institute of Certified Public Accountants
to furnish a statement to the Purchaser to the effect that such firm has
examined certain documents and records relating to the servicing of the
Mortgage Loans and this Agreement and that such firm is of the opinion that
the provisions of Article II and Article IV have been complied with, and
that, on the basis of such examination conducted substantially in compliance
with the Single Attestation Program for Mortgage Bankers, nothing has come to
their attention which would indicate that such servicing has not been
conducted in compliance therewith, except for (i) such exceptions as such
firm shall believe to be immaterial, and (ii) such other exceptions as shall
be set forth in such statement.
Section 6.06 Right to Examine Company Records.
--------------------------------
The Purchaser shall have the right to examine and audit any and all of
the books, records, or other information of the Company, whether held by the
Company or by another on its behalf, with respect to or concerning this
Agreement or the Mortgage Loans, during business hours or at such other times
as may be reasonable under applicable circumstances, upon reasonable advance
notice.
ARTICLE VII
COMPANY TO COOPERATE
--------------------
Section 7.01 Provision of Information.
------------------------
During the term of this Agreement, the Company shall furnish to the
Purchaser such periodic, special, or other reports or information and copies
or originals of any documents contained in the Servicing File for each
Mortgage Loan, whether or not provided for herein, as shall be necessary,
reasonable, or appropriate with respect to the Purchaser, any regulatory
requirement pertaining to the Purchaser or the purposes of this Agreement.
All such reports, documents or information shall be provided by and in
accordance with all reasonable instructions and directions which the
Purchaser may give.
The Company shall execute and deliver all such instruments and take all
such action as the Purchaser may reasonably request from time to time, in
order to effectuate the purposes and to carry out the terms of this
Agreement.
Section 7.02 Financial Statements; Servicing Facilities.
-------------------------------------------
The Company shall furnish promptly to the Purchaser a Consolidated
Statement of Operations of Mellon Bank Corporation for the most recently
completed five fiscal years for which such a statement is available, as well
as a Consolidated Statement of Condition at the end of the last two fiscal
years covered by such Consolidated Statement of Operations. The Company also
shall make available any comparable interim statements to the extent any such
statements have been prepared by or on behalf of the Company (and are
available upon request to members or stockholders of the Company or to the
public at large). If it has not already done so, the Company shall furnish
promptly to the Purchaser copies of the statement specified above.
The Company also shall make available to Purchaser a knowledgeable
financial or accounting officer for the purpose of answering questions
respecting recent developments affecting the Company or the financial
statements of the Company.
ARTICLE VIII
THE COMPANY
-----------
Section 8.01 Third Party Claims.
------------------
The Company immediately shall notify the Purchaser if a claim is made by
a third party with respect to this Agreement or the Mortgage Loans, assume
(with the prior written consent of the Purchaser) the defense of any such
claim and pay all expenses in connection therewith, including reasonable and
necessary counsel fees, and promptly pay, discharge and satisfy any judgment
or decree which may be entered against it or the Purchaser in respect of such
claim. The Company shall follow any written instructions received from the
Purchaser in connection with such claim. The Purchaser promptly shall
reimburse the Company for all amounts advanced by it pursuant to the
preceding sentence except when the claim is in any way related to the
Company's indemnification pursuant to Section 3.03 and the Purchaser has
notified the Company of such third party claim as provided herein, or to the
failure of the Company to service and administer the Mortgage Loans in strict
compliance with the material terms of this Agreement and such failure of the
Company is not attributable to acts or omissions by the Purchaser. In the
event of claims relating to the Company's indemnification pursuant to Section
3.03, the Purchaser immediately shall notify the Company of any claim by a
third party.
Section 8.02 Merger or Consolidation of the Company.
--------------------------------------
The Company shall keep in full effect its existence, rights and
franchises as a corporation, and shall obtain and preserve its qualification
to do business as a foreign corporation in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Agreement or any of the Mortgage Loans and to perform
its duties under this Agreement.
Any person into which the Company may be merged or consolidated, or any
corporation resulting from any merger, conversion or consolidation to which
the Company shall be a party, or any Person succeeding to the business of the
Company, shall be the successor of the Company hereunder, without the
execution or filing of any paper or any further act on the part of any the
parties hereto, anything herein to the contrary notwithstanding; provided,
however, that the successor or surviving Person shall be an institution (i)
whose deposits are insured by the FDIC through the BIF or the SAIF, (ii)
which is or is affiliated with a FNMA-approved servicer in good standing, and
(iii) has a net worth of at least $15 million.
Section 8.03 Limitation on Liability of Company and Others.
---------------------------------------------
Neither the Company nor any of the parents, affiliates, subsidiaries,
directors, officers, employees or agents of the Company shall be under any
liability to the Purchaser for any action taken or for refraining from the
taking of any action in good faith pursuant to this Agreement, or for errors
in judgment; provided, however, that this provision shall not protect the
Company or any such Person against any breach of warranties or
representations made herein, or failure to perform its obligations in strict
compliance with any standard of care set forth in this Agreement, or any
liability which would otherwise be imposed by reason of any breach of the
terms and conditions of this Agreement. The Company and any parent,
affiliate, subsidiary, director, officer, employee or agent of the Company
may rely in good faith on any document of any kind prima facie properly
executed and submitted by any Person respecting any matters arising
hereunder. The Company shall not be under any obligation to appear in,
prosecute or defend any legal action which is not incidental to its duties to
service the Mortgage Loans in accordance with this Agreement and which in its
opinion may involve it in any expense or liability; provided, however, that
the Company may, with the consent of the Purchaser, undertake any such action
which it may deem necessary or desirable in respect to this Agreement and the
rights and duties of the parties hereto. In such event, the Company shall be
entitled to reimbursement from the Purchaser of the reasonable legal expenses
and costs of such action.
Section 8.04 Limitation on Resignation and Assignment by Company.
---------------------------------------------------
The Purchaser has entered into this Agreement with the Company and any
subsequent Purchaser will purchase the Mortgage Loans in reliance upon the
independent status of the Company, and the representations as to the adequacy
of its servicing facilities, plant, personnel, records and procedures, its
integrity, reputation and financial standing, and the continuance thereof.
Therefore, the Company shall not assign this Agreement or the servicing
hereunder nor shall it delegate its rights or duties hereunder or any portion
hereof (to other than a Subservicer) or sell or otherwise dispose of all or
substantially all of its property or assets without the prior written consent
of the Purchaser (which consent shall be granted or withheld in the sole
discretion of the Purchaser) except that the Company may assign this
Agreement to a successor, parent, or affiliated entity without the prior
written consent of the Purchaser in accordance with Section 8.02.
The Company shall not resign from the obligations and duties hereby
imposed on it except by mutual consent of the Company and the Purchaser or
upon the determination that its duties hereunder are no longer permissible
under applicable law and such incapacity cannot be cured by the Company by
reasonable means. Any such determination permitting the resignation of the
Company shall be evidenced by an Opinion of Counsel to such effect delivered
to the Purchaser, which Opinion of Counsel shall be in form and substance
acceptable to the Purchaser. No such resignation shall become effective
until a successor shall have assumed the Company's responsibilities and
obligations hereunder in the manner provided in Section 11.01.
Without in any way limiting the generality of this Section 8.04, and
except as otherwise permitted under this Agreement, in the event that the
Company either shall assign this Agreement or the servicing responsibilities
hereunder or delegate its duties hereunder or any portion thereof (to other
than a Subservicer) or sell or otherwise dispose of all or substantially all
of its property or assets, without the prior written consent of the
Purchaser, then the Purchaser shall have the right to terminate this
Agreement upon notice given as set forth in Section 11.05, without any
payment of any penalty or damages and without any liability whatsoever to the
Company or any third party.
ARTICLE IX
DEFAULT
-------
Section 9.01 Events of Default.
-----------------
Each of the following shall constitute an Event of Default on the part
of the Company:
(i) any failure by the Company to remit to the Purchaser any payment
required to be made under the terms of this Agreement which continues
unremedied for a period of five (5) Business Days after the date upon which
written notice of such failure, requiring the same to be remedied, shall have
been given to the Company by the Purchaser; or
(ii) failure by the Company duly to observe or perform in any material
respect any other of the covenants or agreements on the part of the Company
set forth in this Agreement or in the Custodial Agreement which continues
unremedied for a period of thirty (30) days after the date on which written
notice of such failure, requiring the same to be remedied, shall have been
given to the Company by the Purchaser (or by the Custodian); or
(iii) failure by the Company to maintain any license required to do
business in any jurisdiction where a Mortgaged Property is located; or
(iv) a decree or order of a court or agency or supervisory authority
having jurisdiction for the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt, including bankruptcy,
marshaling of assets and liabilities or similar proceedings, or for the
winding-up or liquidation of its affairs, shall have been entered against the
Company and such decree or order shall have remained in force undischarged or
unstayed for a period of sixty (60) days; or
(v) the Company shall consent to the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt, marshaling of
assets and liabilities or similar proceedings of or relating to the Company
or of or relating to all or substantially all of its property; or
(vi) the Company shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of any
applicable insolvency, bankruptcy or reorganization statute, make an
assignment for the benefit of its creditors, voluntarily suspend payment of
its obligations or cease its normal business operations for three (3)
Business Days; or
(vii) the Company ceases to meet the financial qualifications of a
FNMA lender; or
(viii) the Company attempts to assign its right to servicing
compensation hereunder or the Company attempts, without the consent of the
Purchaser, to sell or otherwise dispose of all or substantially all of its
property or assets or to assign this Agreement or the servicing
responsibilities hereunder or to delegate its duties hereunder or any portion
thereof ( to other than a Subservicer) in violation of Section 8.04.
In each and every such case, so long as an Event of Default shall not
have been remedied (within, if applicable, the period specified), in addition
to whatsoever rights the Purchaser may have at law or equity to damages,
including injunctive relief and specific performance, the Purchaser, by
notice in writing to the Company, may terminate all the rights and
obligations of the Company under this Agreement and in and to the Mortgage
Loans and the proceeds thereof.
Upon receipt by the Company of such written notice, all authority and
power of the Company under this Agreement, whether with respect to the
Mortgage Loans or otherwise, shall pass to and be vested in the successor
appointed pursuant to Section 11.01. Upon written request from the
Purchaser, the Company shall prepare, execute and deliver to the successor
entity designated by the Purchaser any and all documents and other
instruments, place in such successor's possession all Mortgage Files, and do
or cause to be done all other acts or things necessary or appropriate to
effect the purposes of such notice of termination, including but not limited
to the transfer and endorsement or assignment of the Mortgage Loans and
related documents, at the Company's sole expense. The Company shall
cooperate with the Purchaser and such successor in effecting the termination
of the Company's responsibilities and rights hereunder, including without
limitation, the transfer to such successor for administration by it of all
cash amounts which shall at the time be credited by the Company to the
Custodial Account or Escrow Account or thereafter received with respect to
the Mortgage Loans.
Section 9.02 Waiver of Defaults.
------------------
By a written notice, the Purchaser may waive any default by the Company
in the performance of its obligations hereunder and its consequences. Upon
any waiver of a past default, such default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been remedied for
every purpose of this Agreement. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereon except to
the extent expressly so waived.
ARTICLE X
TERMINATION
-----------
Section 10.01 Termination.
-----------
This Agreement shall terminate upon either: (i) the later of the final
payment or other liquidation (or any advance with respect thereto) of the
last Mortgage Loan or the disposition of any REO Property with respect to the
last Mortgage Loan and the remittance of all funds due hereunder; or (ii)
mutual consent of the Company and the Purchaser in writing.
ARTICLE XI
MISCELLANEOUS PROVISIONS
------------------------
Section 11.01 Successor to Company.
--------------------
Prior to termination of the Company's responsibilities and duties under
this Agreement pursuant to Sections 8.04, 9.01 or 10.01 (ii) the Purchaser
shall (i) succeed to and assume all of the Company's responsibilities,
rights, duties and obligations under this Agreement, or (ii) appoint a
successor having the characteristics set forth in clauses (i) through (iii)
of Section 8.02 and which shall succeed to all rights and assume all of the
responsibilities, duties and liabilities of the Company under this Agreement
prior to the termination of Company's responsibilities, duties and
liabilities under this Agreement. In connection with such appointment and
assumption, the Purchaser may make such arrangements for the compensation of
such successor (not to exceed the Servicing Fee) out of payments on Mortgage
Loans as it and such successor shall agree. In the event that the Company's
duties, responsibilities and liabilities under this Agreement should be
terminated pursuant to the aforementioned sections, the Company shall
discharge such duties and responsibilities during the period from the date it
acquires knowledge of such termination until the effective date thereof with
the same degree of diligence and prudence which it its obligated to exercise
under this Agreement, and shall take no action whatsoever that might impair
or prejudice the rights or financial condition of its successor. The
resignation or removal of the Company pursuant to the aforementioned
sections shall not become effective until a successor shall be appointed
pursuant to this Section 11.01 and shall in no event relieve the Company of
the representations and warranties made pursuant to Sections 3.01 and 3.02
and the remedies available to the Purchaser under Section 3.03, it being
understood and agreed that the provisions of such Sections 3.01 and 3.02
shall be applicable to the Company notwithstanding any such sale, assignment,
resignation or termination of the Company, or the termination of this
Agreement.
Any successor appointed as provided herein shall execute, acknowledge
and deliver to the Company and to the Purchaser an instrument accepting such
appointment, wherein the successor shall make the representations and
warranties set forth in ▇▇▇▇▇▇▇ ▇.▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ (▇), (▇), (▇)
and (k) thereof, whereupon such successor shall become fully vested with all
the rights, powers, duties, responsibilities, obligations and liabilities of
the Company, with like effect as if originally named as a party to this
Agreement. Any termination or resignation of the Company or termination of
this Agreement pursuant to Section 8.04, 9.01 or 10.01 shall not affect any
claims that any Purchaser may have against the Company arising out of the
Company's actions or failure to act prior to any such termination or
resignation.
The Company shall deliver promptly to the successor servicer the funds
in the Custodial Account, REO Account and Escrow Account and all Mortgage
Files and related documents and statements held by it hereunder and the
Company shall account for all funds and shall execute and deliver such
instruments and do such other things as may reasonably be required to more
fully and definitively vest in the successor all such rights, powers, duties,
responsibilities, obligations and liabilities of the Company.
Section 11.02 Amendment.
---------
Capitalized terms used in this Section 11.02 but not defined in this
Agreement shall have the meanings assigned to them in the Trust Agreement.
(a) This Agreement may be amended from time to time by the Company and
the Purchaser (ii) to cure any ambiguity, (ii) to correct or supplement any
provision herein which may be inconsistent with any other provisions herein,
(iii) to make any other provisions, with respect to matters or questions
arising under this Agreement or (iv) to add, delete, or amend any provisions
to the extent necessary or desirable to comply with any requirements imposed
by the Code and the REMIC Provisions. No such amendment effected pursuant to
the preceding sentence shall, as evidenced by an Opinion of Counsel,
adversely affect the status of any REMIC created pursuant to the Trust
Agreement, nor shall such amendment effected pursuant to clause (iii) of such
sentence adversely affect in any material respect the interest of any Holder
of any Certificates issued by the Trust. Prior to entering into any
amendment pursuant to this paragraph, the Purchaser may require an Opinion of
Counsel (at the expense of the party requesting such amendment) to the effect
that such amendment is permitted under this paragraph. Any such amendment
shall be deemed not to adversely affect in any material respect any Holder of
Certificates, if the Purchaser receives written confirmation from each Rating
Agency that such amendment will not cause such Rating Agency to reduce the
then current rating assigned to the Certificates (and any Opinion of Counsel
requested by the Trustee in connection with any such amendment may rely
expressly on such confirmation as the basis therefor).
(b) This Agreement may also be amended from time to time by the Company
and the Purchaser with the consent of the Holders of not less that 662/3% of
the Class Certificate Principal Amount (or Aggregate Notional Amount) of each
Class of Certificates affected thereby for the purpose of adding any
provisions to or changing in any manner or deleting any of the provisions of
this Agreement or of modifying in any manner the rights of the Holders
(except as such additions, changes, deletions or modifications may be
permitted under Section 11.02(a) above); provided, however, that no such
amendment shall be made unless the Purchaser receives an Opinion of Counsel,
at the expense of the party requesting the change, that such change will not
adversely affect the status of any REMIC created pursuant to the Trust
Agreement as a REMIC or cause a tax to be imposed on any such REMIC.
Section 11.03 Governing Law.
-------------
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO
CONFLICT OF LAW PRINCIPLES APPLIED IN SUCH STATE.
Section 11.04 Duration of Agreement.
---------------------
This Agreement shall continue in existence and effect until terminated
as herein provided, except that Sections 3.01, 3.02, 8.01 and 8.03 shall
survive such termination. This Agreement shall continue notwithstanding
transfers of the Mortgage Loans by the Purchaser.
Section 11.05 Notices.
-------
All demands, notices and communications hereunder shall be in writing
and shall be deemed to have been duly given if personally delivered at or
mailed by registered mail, postage prepaid, addressed follows:
(i) if to the Company: Boston Safe Deposit and Trust Company
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
with a copy to: ▇▇▇▇▇▇▇ ▇▇▇▇, Esq.
Deputy General Counsel
The Boston Company
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
or such other address as may hereafter be furnished to the Purchaser in
writing by the Company;
(ii) if to Purchaser: ▇▇▇▇▇▇ Capital
c/▇ ▇▇▇▇▇▇ Brothers Holdings Inc.
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
with a copy to: ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ & Wood LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
or such other address as may hereafter be furnished to the Company in writing
by the Purchaser.
Section 11.06 Severability of Provisions.
--------------------------
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be held invalid for any reason whatsoever, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and
shall in no way affect the validity or enforceability of the other provisions
of this Agreement.
Section 11.07 Relationship of Parties.
-----------------------
Nothing herein contained shall be deemed or construed to create a
partnership or joint venture between the parties hereto and the services of
the Company shall be rendered as an independent contractor and not as agent
for the Purchaser.
Section 11.08 Execution; Successors and Assigns.
---------------------------------
This Agreement may be executed in one or more counterparts and by the
different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together,
shall constitute one and the same agreement. This Agreement shall inure to
the benefit of and be binding upon the Company and the Purchaser and their
respective successors and permitted assigns.
Section 11.09 Integration.
-----------
This Agreement, including all schedules and exhibits, constitutes the
entire agreement between the parties hereto with respect to the transactions
contemplated hereby and supersedes all prior discussions, understandings,
agreements and negotiations between the parties hereto with respect to such
transactions; provided, however, that the Purchase Price referred to herein
shall be the purchase price set forth in the Purchase Price and Terms Letter,
and that provision of the Purchase Price and Terms Letter shall survive for
the exclusive purpose of such cross-reference. The provisions of this
Agreement shall govern in any conflict between the terms of this Agreement
and the Purchase Price and Terms Letter.
Section 11.10 Assignment by Purchaser.
-----------------------
The Purchaser shall have the right, without the consent of the Company
but subject to the limit set forth in Section 2.02 hereof, to assign, in
whole or in part, its interest under this Agreement with respect to some or
all of the Mortgage Loans, and designate any person to exercise any rights of
the Purchaser hereunder, and the assignee or designee shall accede to the
rights and obligations hereunder of the Purchaser with respect to such
Mortgage Loans. All references to the Purchaser in this Agreement shall be
deemed to include its assignee or designee and any subsequent assignee,
specifically including the Trustee.
Section 11.11 No Solicitation.
---------------
From and after the Closing Date, the Company agrees that it will not
take any action or permit or cause any action to be taken by any of its
agents or affiliates, or by any independent contractors on the Company's
behalf, to personally, by telephone or mail, solicit the borrower or obligor
under any Mortgage Loan for purposes relating to the marketing of the
Company's first mortgage loan products, including to refinance a Mortgage
Loan, in whole or in part, without the prior written consent of the
Purchaser, its successors and assigns. It is understood and agreed that all
rights and benefits relating to the solicitation of any Mortgagors and the
attendant rights, title and interest in and to the list of such Mortgagors
and data relating to their Mortgages (including insurance renewal dates)
shall be transferred to the Purchaser pursuant hereto on the Closing Date and
the Company shall take no action to undermine these rights and benefits.
Notwithstanding the foregoing, it is understood and agreed that general
promotions undertaken by the Company or any affiliate of the Company,
including, without limitation, mass mailings based on commercially acquired
mailing lists, newspaper, radio and television advertisements, shall not
constitute solicitation under this Section 11.11.
Section 11.12 Reconstitution.
--------------
The Company understands and agrees that it is the intent of the
Purchaser to securitize the Mortgage Loans (i.e., to form a trust and to
issue securities evidencing interests therein). The Company agrees to review
and adhere to the terms of any agreements that may be required to facilitate
such securitization, it being understood that any such agreements will not
impose upon the Company any obligations more burdensome than those contained
in this Agreement, and to provide and execute such certificates, Opinions of
Counsel and other documents as may be necessary to facilitate such
securitization.
The Company agrees that, not withstanding anything to the contrary in
the Purchase Price and Terms Letter or in this Agreement (including Section
11.09 hereof), the provisions of Sections 4 and 12 of the Purchase Price and
Terms Letter shall survive the execution of this Agreement and shall remain
in effect.
IN WITNESS WHEREOF, the Company and the Purchaser have caused their
names to be signed hereto by their respective officers thereunto duly
authorized as of the day and year first above written.
▇▇▇▇▇▇ CAPITAL, A DIVISION OF ▇▇▇▇▇▇ BROTHERS
HOLDINGS INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President
BOSTON SAFE DEPOSIT AND TRUST COMPANY
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
___________________________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
STATE OF
---------------------)
)
COUNTY OF ) ss.:
--------------------)
On the ____ day of _________, 1997 before me, a Notary Public in and for
said State, personally appeared ________________________________, known to me
to be ____________ of
________________________________________________________________ the
corporation that executed the within instrument and also known to me to be
the person who executed it on behalf of said corporation, and acknowledged to
me that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand affixed my office seal
the day and year in this certificate first above written.
-----------------------------------
Notary Public
My Commission expires: ______________
COMMONWEALTH OF MASSACHUSETTS )
)
COUNTY OF SUFFOLK ) ss.:
On the ____ day of ___________, 1997 before me, a Notary Public in and
for said Commonwealth, personally appeared ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, known to me to be
Vice President of Boston Safe Deposit and Trust Company, the trust company
that executed the within instrument and also known to me to be the person who
executed it on behalf of said trust company, and acknowledged to me that such
trust company executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand affixed my office seal
the day and year in this certificate first above written.
-----------------------------------------------
Notary Public
My Commission expires:_________________________
EXHIBIT A
MORTGAGE LOAN SCHEDULE
EXHIBIT B
CONTENTS OF EACH MORTGAGE FILE
With respect to each Mortgage Loan, the Mortgage File shall include
originals or copies of each of the following items, which shall be available
for inspection by the Purchaser and any prospective Purchaser. To the extent
that the Servicing File contains copies of any of the items set forth herein,
the Company represents to the Purchaser that the originals or certified
copies of said items have been delivered to the Custodian pursuant to Section
2 of the Custodial Agreement, except as indicated on Schedule I thereto.
----------
1. The original Mortgage Note bearing all intervening endorsements,
endorsed "Pay to the order of Norwest Bank Minnesota, N.A., as Trustee
under a Trust Agreement dated as of January 1, 1997, between Structured
Asset Securities Corporation, as Depositor, and the Trustee, relating to
Structured Asset Securities Corporation Mortgage Pass-Through
Certificates, Series 1997-1, without recourse" and signed in the name of
the Company by an authorized officer (in the event that the Mortgage
Loan was acquired by the Company in a merger, the signature must be in
the following form: "Boston Safe Deposit and Trust Company, successor
by merger to (name of predecessor)"; and in the event that the Mortgage
Loan was acquired or originated by the Company while doing business
under another name, the signature must be in the following form:
"Boston Safe Deposit and Trust Company, formerly known as (previous
name)".
2. The original of any guarantee executed in connection with the Mortgage
Note (if any).
3. The original Mortgage or Deed of Trust, with evidence of recording
thereon and, as to Coop Loans, the original Pledge and Security
Agreement, or copies certified by the related recording office or if the
original Mortgage has not yet been returned from the recording office, a
copy certified by the Seller indicating that such Mortgage has been
delivered for recording. The return directions for the original
Mortgage should indicate, when recorded, mail to the Company.
4. The originals of all assumption, modification, consolidation or
extension agreements, with evidence of recording thereon.
5. The original Assignment of Security Agreement or Assignment of Mortgage
for each Mortgage Loan, in form and substance acceptable for recording.
The Assignment of Security Agreement and the Assignment of Mortgage
shall be delivered in blank.
6. Originals of any intervening recorded assignments of the Mortgage with
evidence of recording thereon, or if any such intervening assignment has
not been returned from the applicable recording office or has been lost
or if such public recording office retains the original recorded
assignments of Mortgage, the Company shall deliver or
cause to be delivered to the Custodian, a photocopy of such intervening
assignment, together with (i) in the case of delay caused by the public
recording office, an Officer's Certificate of the Company stating that
such intervening assignment of Mortgage has been dispatched to the
appropriate public recording office for recordation and that such
original recorded intervening assignment of mortgage or a copy of such
intervening assignment of mortgage certified by the appropriate public
recording office or by the title insurance company that issued the title
policy to be a true and complete copy of the original recorded
intervening assignment of mortgage will be promptly delivered to the
Custodian upon receipt thereof by the Company; or (ii) in the case of an
intervening assignment where a public recording office retains the
original recorded intervening assignment or in the case where an
intervening assignment is lost after recordation in a public recording
office, a copy of such intervening assignment certified by such public
recording office to be a true and complete copy of the original recorded
intervening assignment.
7. Except as to Coop Loans, the original mortgagee policy of title
insurance or attorney's opinion of title and abstract of title.
8. Any security agreement, chattel mortgage or equivalent executed in
connection with the Mortgage.
9. Except as to Coop Loans, the original hazard insurance policy and, if
required by law, flood insurance policy, in accordance with Section 4.10
of the Agreement.
10. Residential loan application.
11. Mortgage Loan closing statement.
12. Verification of employment and income.
13. Verification of acceptable evidence of source and amount of down-
payment.
14. Credit report on the Mortgagor.
15. Residential appraisal report.
16. Photograph of the Mortgaged Property.
17. Copy of each instrument necessary to complete identification of any
exception set forth in the exception schedule in the title policy, i.e.,
map or plat, restrictions, easements, sewer agreements, home
associations declarations, etc.
18. All required disclosure statements.
19. If available, termite report, structural engineer's report, water
potability and septic certification.
20. Sales contract.
21. Tax receipts, insurance premium receipts, ledger sheets, payment history
form date of origination, insurance claim files, correspondence, current
and historical computerized data files, and all other processing,
underwriting and closing papers and records which are customarily
contained in a mortgage loan file and which are required to document the
Mortgage Loan or to service the Mortgage Loan.
22. As to New York Coop Loans, the following documents: Pledge and Security
Agreement; Stock Certificate; Proprietary Lease; Recognition Agreement
(if any); Stock Power; Assignment of the Lease; and UCC-1.
23. As to San ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ Loans, the following documents: Lessor's
Consent; Lessor's Estoppel Certificate; Leasehold Deed of Trust,
Security Agreement, Assignment of Leases and Rents and Fixture Filing;
Assignment of Leasehold Estate; Title Insurance; Recognition Agreement;
UCC-1; Pledge and Security Agreement.
In the event an Officer's Certificate of the Company is delivered to the
Custodian because of delay caused by the public recording office in returning
any recorded document, the Company shall deliver to the Custodian, within 60
days of the Closing Date, an Officer's Certificate which shall (i) identify
the recorded document, (ii) state that the recorded document has not been
delivered to the Custodian due solely to a delay caused by the public
recording office, (iii) state the amount of time generally required by the
applicable recording office to record and return a document submitted for
recordation, and (iv) specify the date the applicable recorded document will
be delivered to the Custodian. The Company shall be required to deliver to
the Custodian the applicable recorded document by the date specified in (iv)
above. An extension of the date specified in (iv) above may be requested
from the Purchaser, which consent shall not be unreasonably withheld.
EXHIBIT C-1
MORTGAGE LOAN DOCUMENTS
1. The original Mortgage Note bearing all intervening endorsements,
endorsed "Pay to the order of Norwest Bank Minnesota, N.A., as Trustee
under a Trust Agreement dated as of January 1, 1997, between Structured
Asset Securities Corporation, as Depositor, and the Trustee, relating to
Structured Asset Securities Corporation Mortgage Pass-Through
Certificates, Series 1997-1, without recourse" and signed in the name of
the Company by an authorized officer (in the event that the Mortgage
Loan was acquired by the Company in a merger, the signature must be in
the following form: "Boston Safe Deposit and Trust Company, successor
by merger to (name of predecessor)"; and in the event that the Mortgage
Loan was acquired or originated by the Company while doing business
under another name, the signature must be in the following form:
"Boston Safe Deposit and Trust Company, formerly known as (previous
name)".
2. The original of any guarantee executed in connection with the Mortgage
Note (if any).
3. The original Mortgage or Deed of Trust, with evidence of recording
thereon and, as to Coop Loans, the original Pledge and Security
Agreement, or copies certified by the related recording office or if the
original Mortgage has not yet been returned from the recording office, a
copy certified by the Seller indicating that such Mortgage has been
delivered for recording. The return directions for the original
Mortgage should indicate, when recorded, mail to the Seller.
4. The originals of all assumption, modification, consolidation or
extension agreements, with evidence of recording thereon.
5. The original Assignment of Security Agreement or Assignment of Mortgage
for each Mortgage Loan, in form and substance acceptable for recording.
The Assignment of Security Agreement and the Assignment of Mortgage
shall be delivered in blank.
6. Originals of any intervening recorded assignments of the Mortgage with
evidence of recording thereon, or if any such intervening assignment has
not been returned from the applicable recording office or has been lost
or if such public recording office retains the original recorded
assignments of Mortgage, the Company shall deliver or cause to be
delivered to the Custodian, a photocopy of such intervening assignment,
together with (i) in the case of delay caused by the public recording
office, an Officer's Certificate of the Company stating that such
intervening assignment of Mortgage has been dispatched to the
appropriate public recording office for recordation and that such
original recorded intervening assignment of Mortgage or a copy of such
intervening assignment of Mortgage certified by the appropriate public
recording office or by the title insurance company that issued the title
policy to be a true and complete copy of the original recorded
intervening assignment of Mortgage will be promptly delivered to
the Custodian upon receipt thereof by the Company; or (ii) in the case
of an intervening assignment where a public recording office
retains the original recorded intervening assignment or in the case
where an intervening assignment is lost after recordation in a public
recording office, a copy of such intervening assignment certified by
such public recording office to be a true and complete copy of the
original recorded intervening assignment.
7. Except as to Coop Loans, the original mortgagee policy of title
insurance or attorney's opinion of title and abstract of title.
8. Any security agreement, chattel mortgage or equivalent executed in
connection with the Mortgage.
9. As to New York Coop Loans, the following documents: Pledge and Security
Agreement; Stock Certificate; Proprietary Lease; Recognition Agreement
(if any); Stock Power; and Assignment of the Lease.
10. As to San ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ Loans, the following documents: Lessor's
Consent; Lessor's Estoppel Certificate; Leasehold Deed of Trust,
Security Agreement, Assignment of Leases and Rents and Fixture Filing;
Assignment of Leasehold Estate; Title Insurance; Recognition Agreement;
UCC-1; Pledge and Security Agreement.
In the event an Officer's Certificate of the Company is delivered to the
Custodian because of delay caused by the public recording office in returning
any recorded document, the Company shall deliver to the Custodian, within 60
days of the Closing Date, an Officer's Certificate which shall (i) identify
the recorded document, (ii) state that the recorded document has not been
delivered to the Custodian due solely to a delay caused by the public
recording office, (iii) state the amount of time generally required by the
applicable recording office to record and return a document submitted for
recordation, and (iv) specify the date the applicable recorded document will
be delivered to the Custodian. The Company shall be required to deliver to
the Custodian the applicable recorded document by the date specified in (iv)
above. An extension of the date specified in (iv) above may be requested
from the Purchaser, which consent shall not be unreasonably withheld.
EXHIBIT C-2 (CUSTODIAL AGREEMENT)
ASSIGNMENT AND ASSUMPTION
This ASSIGNMENT AND ASSUMPTION, dated January __, 1997, is by and
between ▇▇▇▇▇▇ Capital, a New York corporation now doing business as ▇▇▇▇▇▇
Capital, A Division of ▇▇▇▇▇▇ Brothers Holdings Inc. ("Assignor") and Boston
Safe Deposit and Trust Company, a Massachusetts trust company ("Assignee").
For and in consideration of the sum of TEN DOLLARS ($10.00) and other
valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, and of the mutual covenants herein contained, the parties
hereto hereby agree as follows:
1. The Assignor hereby grants, transfers and assigns to Assignee, and
Assignee hereby assumes all of the rights of Assignor as Servicer, in, to and
under that Custodial Agreement, Group LCC - 1993 - 1 (the "Agreement"), dated
as of February 1, 1993, by and between ▇▇▇▇▇▇ Capital Corporation (the
"Owner" and "Initial Servicer"), and First Trust National Association (the
"Custodian") only as such rights relate to the Mortgage Loans set forth on
Exhibit A annexed hereto. Capitalized terms used and not defined herein
shall have the meanings ascribed to such terms by the Agreement.
2. The Assignor warrants and represents to, and covenants with, the
Assignee that:
a. The Assignor has not received notice of, and has no knowledge
of, any offsets, counterclaims or other defenses available to
the Custodian or the Owner with respect to the Agreement; and
b. The Assignor has not waived or agreed to any waiver under, or
agreed to any amendment or other modification of, the
Agreement or the Mortgage Loans, including without limitation
the transfer of the servicing obligations under the Agreement.
The Assignor has no knowledge of, and has not received notice
of, any waivers under or amendments or other modifications of,
or assignments of rights or obligations under, the Agreement.
3. The Assignee warrants and represents to, and covenants with, the
Assignor that except as otherwise provided herein, the Assignee agrees to be
bound, as Servicer, by all of the terms, covenants and conditions of the
Agreement, from and after the date hereof. The Assignee assumes for the
benefit of each of the Custodian, Owner and the Assignor all of the
Assignor's obligations as Servicer thereunder, except as set forth below.
4. Assignor and Assignee agree that this Assignment and Assumption
shall exclude the following terms and conditions of the Agreement for
purposes of any assignment or delegation hereunder, or shall incorporate such
terms and conditions only as modified hereby:
a. Assignee shall not be responsible for delivery of the Mortgage
Loan Documents identified in Section 2 of the Agreement, but
shall instead deliver the documents identified in Exhibit B
hereto.
b. Assignee shall have no liability for payment of custodial fees
as provided by Sections 11, 12 and 21 of the Agreement.
Assignee has agreed to pay only those custodial fees that may
be reasonably related to the Initial Certification.
Assignor shall remain fully liable for the duties excluded herefrom or
modified hereby. Assignor shall indemnify and hold Assignee harmless from
and against any and all claims, liabilities, damages, actions, judgments and
expenses, including but not limited to reasonable attorneys' fees, arising
from or related to this Assignment and Assumption.
5. Unless earlier terminated in accordance with the Agreement, this
Assignment and Assumption shall terminate upon the closing of the sale of the
Mortgage Loans by the Owner. This Assignment and Assumption may not be
assigned by either party without the prior written consent of the other
party, which consent may be withheld in that party's sole discretion.
IN WITNESS WHEREOF, the parties have caused this Assignment and
Assumption to be executed by their duly authorized officers as of the date
first above written.
▇▇▇▇▇▇ CAPITAL, BOSTON SAFE DEPOSIT AND
A DIVISION OF ▇▇▇▇▇▇ BROTHERS TRUST COMPANY,
HOLDINGS INC.,
Assignor Assignee
By: By:
---------------------- ----------------------
Name: Name:
-------------------- --------------------
Title: Title:
------------------------ ------------------------
Its: Its:
--------------------- ---------------------
EXHIBIT C-3
REQUEST FOR RELEASE OF DOCUMENTS AND RECEIPT
To: _______________________________________ (Address)
In connection with the administration of the Mortgage Loans held by you
as Trustee (or by the Custodian on your behalf) under a certain Trust
Agreement dated as of January 1, 1997 between Structured Asset Securities
Corporation, as Depositor, and you, as Trustee (the "Trust Agreement"), we
request the release, and acknowledge receipt, of the ((specify documents))
for the Mortgage Loan described below, for the reason indicated.
Mortgagor's Name, Address & Zip Code:
Mortgage Loan Number:
Reason for Requesting Documents (check one)
_____1 Mortgage Loan Paid in Full. (The Company hereby certifies that all
amounts received in connection therewith have been credited as required.)
_____2. Mortgage Loan Repurchase. (The Company hereby certifies that the
Mortgage Loan has been repurchased from Purchaser.)
_____3. Mortgage Loan Liquidated by ______________. (The Company hereby
certifies that all proceeds of foreclosure, insurance, condemnation or other
liquidation have been finally received and properly credited.)
_____4. Mortgage Loan in Foreclosure.
_____5. Other (explain)
_______________________________________
_______________________________________
If box 1, 2, or 3 above is checked, and if all or part of the file was
previously released to us, please release to us our previous request and
receipt on file with you, as well as any additional documents in your
possession relating to the specified Mortgage Loan.
If box 4 or 5 above is checked, upon our return of all the above
documents to you, please acknowledge your receipt by signing in the space
indicated below, and returning this form.
BOSTON SAFE DEPOSIT AND TRUST COMPANY
By:
--------------------------
Name:
------------------------
Title:
-----------------------
Acknowledgment of Documents returned to the Trustee:
(TRUSTEE)
By:
--------------------------
Name:
------------------------
Title:
-----------------------
EXHIBIT D-1
CUSTODIAL ACCOUNT CERTIFICATION
______________, ____
Boston Safe Deposit and Trust Company hereby certifies that it has
established the account described below as a Custodial Account pursuant to
Section 4.04 of the Mortgage Loan Sale, Warranties and Servicing Agreement,
dated as of January 1, 1997.
Title of Account: Boston Safe Deposit and Trust Company in trust for Norwest
Bank Minnesota, N.A., as Trustee, Structured Asset Securities Corporation
Mortgage Pass-Through Certificates, Series 1997-1, (or such other designation
as the Purchaser may direct).
Account Number: _________________________________
Address of office or branch
of the Company at
which Account is maintained:
-----------------------
-----------------------
-----------------------
-----------------------
BOSTON SAFE DEPOSIT AND TRUST COMPANY
By:
------------------------
Name:
----------------------
Title:
---------------------
EXHIBIT D-2
CUSTODIAL ACCOUNT LETTER AGREEMENT
__________________, _____
To: ____________________________
____________________________
____________________________
(the "Depository")
As Company under the Mortgage Loan Sale, Warranties and Servicing
Agreement, dated as of January 1, 1997, Residential Adjustable Rate Mortgage
Loans, Group____________ (the "Agreement"), we hereby authorize and request
you to establish an account, as a Custodial Account pursuant to Section 4.04
of the Agreement, to be designated as "Boston Safe Deposit and Trust Company,
in trust for Norwest Bank Minnesota, N.A., as Trustee, Structured Asset
Securities Corporation Mortgage Pass-Through Certificates, Series 1997-1, (or
such other designation as the Purchaser may direct)." All deposits in the
account shall be subject to withdrawal therefrom by order signed by the
Company. You may refuse any deposit which would result in violation of the
requirement that the account be fully insured as described below. This
letter is submitted to you in duplicate. Please execute and return one
original to us.
BOSTON SAFE DEPOSIT AND TRUST COMPANY
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
The undersigned, as Depository, hereby certifies that the above
described account has been established under Account Number ________________,
at the office of the Depository indicated above, and agrees to honor
withdrawals on such account as provided above. The full amount deposited at
any time in the account will be insured by the Federal Deposit Insurance.
Corporation through the Bank Insurance Fund ("BIF") or the Savings
Association Insurance Fund ("SAIF").
(DEPOSITORY)
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
Date:
---------------------------
EXHIBIT E-1
ESCROW ACCOUNT CERTIFICATION
______________, ____
Boston Safe Deposit and Trust Company hereby certifies that it has
established the account described below as an Escrow Account pursuant to
Section 4.06 of the Mortgage Loan Sale, Warranties and Servicing Agreement,
dated as of January 1, 1997, Norwest Bank Minnesota, N.A., as Trustee,
Structured Asset Securities Corporation Mortgage Pass-Through Certificates,
Series 1997-1, (or such other designation as the Purchaser may direct).
Title of Account: "Boston Safe Deposit and Trust Company in trust for the
Purchaser Group _____________, and various Mortgagors."
Account Number: _______________________________
Address of office or branch
of the Company at
which Account is maintained:
---------------------
---------------------
---------------------
---------------------
BOSTON SAFE DEPOSIT AND TRUST COMPANY
By:
----------------------
Name:
--------------------
Title:
-------------------
EXHIBIT E-2
ESCROW ACCOUNT LETTER AGREEMENT
__________________, 199__
To: ____________________________
____________________________
____________________________
(the "Depository")
As Company under the Mortgage Loan Sale, Warranties and Servicing
Agreement, dated as of January 1, 1997 (the "Agreement"), we hereby authorize
and request you to establish an account, as an Escrow Account pursuant to
Section 4.07 of the Agreement, to be designated as "Boston Safe Deposit and
Trust Company, in trust for Norwest Bank Minnesota, N.A., as Trustee,
Structured Asset Securities Corporation Mortgage Pass-Through Certificates,
Series 1997-1, (or such other designation as the Purchaser may direct)." All
deposits in the account shall be subject to withdrawal therefrom by order
signed by the Company. You may refuse any deposit which would result in
violation of the requirement that the account be fully insured as described
below. This letter is submitted to you in duplicate. Please execute and
return one original to us.
BOSTON SAFE DEPOSIT AND TRUST COMPANY
By:
----------------------
Name:
--------------------
Title:
-------------------
The undersigned, as Depository, hereby certifies that the above
described account has been established under Account Number ________________,
at the office of the Depository indicated above, and agrees to honor
withdrawals on such account as provided above. The full amount deposited at
any time in the account will be insured by the Federal Deposit Insurance.
Corporation through the Bank Insurance Fund ("BIF") or the Savings
Association Insurance Fund ("SAIF").
(DEPOSITORY)
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
Date:
---------------------------
EXHIBIT F
MONTHLY REMITTANCE ADVICE
EXHIBIT G
INTENTIONALLY DELETED
EXHIBIT H
COMPANY'S CERTIFICATE OF COMPLIANCE
January 15, 1997
I, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, a Vice President of Boston Safe Deposit and Trust
Company (the "Company"), do hereby confirm and state, on the basis of my
personal knowledge, that the following are true to the best of my knowledge
and belief:
1. I am a Vice President of the Company, having charge of the Mortgage
Loans this day being sold, transferred and assigned to ▇▇▇▇▇▇ Capital, A
Division of ▇▇▇▇▇▇ Brothers Holdings Inc. ("Purchaser").
2. I do hereby confirm that the representations and warranties
contained in Sections 3.01 and 3.02 of the Mortgage Loan Sale, Warranties and
Servicing Agreement entered into as of the first day of January, 1997, are
true and correct as of the date hereof.
______________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President
EXHIBIT I
FORM OF OPINION OF SELLER'S COUNSEL
_____________ ____,199__
(PURCHASER)
Dear Ladies and Gentlemen:
I am Deputy General Counsel of and counsel for Boston Safe Deposit and
Trust Company (the "Seller"), in connection with the sale (the "Sale") by the
Seller of a portfolio of loans secured by residential real estate and shares
of cooperative associations (the "Loans") to ( ) ("the Purchaser") pursuant
to a Mortgage Loan Sale, Warranties and Servicing Agreement dated as of
_____________ ___, ____, by and between the Seller and the Purchaser.
Capitalized terms used but not defined herein have the meanings ascribed to
them in the Agreement.
In connection with rendering this opinion, I have examined originals, or
copies identified to my satisfaction as being true copies of originals, of
the following, among other things:
(a) the Mortgage Loan Sale, Warranties and Servicing Agreement;
(b) the Additional Pledged Collateral Custodial Agreement by and among
the Seller, the Purchaser and ( ) ("the Custodian");
(c) the form of Assignment of Mortgage;
(d) the form of endorsement of the Mortgage Notes;
(e) the Charter and By-laws of the Seller; and,
(f) such other documents, records and papers as we have deemed
necessary and relevant as a basis for this opinion.
For the purposes of the opinions expressed below, I have assumed (i) the
genuineness of all signatures on original documents or instruments; (ii) the
authenticity of all documents or instruments submitted to me as originals,
(iii) the conformity to originals of all documents or instruments submitted
to me as copies; (iv) the due authorization, execution and delivery of
all documents where due authorization, execution and delivery are requisite
to the effectiveness thereof (other than the authorization, execution and
delivery by the Seller of the Agreement, as to which my opinions are
expressed below); (v) that, immediately prior to the transfer of any Loan to
the Purchaser pursuant to the Agreement, with respect to such Loan, (A) the
Seller was the holder and named payee of the Note, (B) the Seller was the
mortgagee or beneficiary, as applicable, under each related Security
Instrument, and (C) the Seller was the owner of such Loan free and clear of
any and all liens, claims, encumbrances, participation interests, equities,
pledges, charges, security or other interests of any nature; (vi) that each
Note corresponding to each Loan has been endorsed by the Seller using the
form of endorsement attached hereto and each Note so endorsed has been
delivered to the Purchaser on or before the date hereof; (vii) that the
Purchaser is acquiring the Loans in good faith for value without notice that
they are overdue or have been dishonored or of any defense against or claim
to the Loans or any interest therein on the part of any person; (viii) that
there is no evidence on any of the Loan Documents of any interest contrary to
the Seller's interests under the Agreement; (ix) that the Seller is solvent
and will not be rendered insolvent by the sale of the portfolio of Loans;
and, (x) that the Seller has received payment of reasonably equivalent value
for the Loans. I have no actual knowledge that any of the foregoing
assumptions is incorrect. I also have relied to the extent I deem proper
upon written statements and certificates of public officials and, as to
various matters of fact relevant to the opinions expressed herein, I have
relied upon certificates and statements of officers of the Seller.
On the basis of the foregoing examination, statements and assumptions
and in reliance thereon and upon consideration of applicable law, I am of the
opinion that:
(1) The Seller is a Massachusetts trust company, duly organized,
validly existing, and in good standing under the laws of the Commonwealth of
Massachusetts and is duly authorized to transact its business.
(2) The Seller has the requisite corporate power to execute and deliver
the Agreement and to consummate the transactions contemplated thereby. The
execution and delivery of the Agreement by the Seller and the consummation of
the transactions contemplated thereby have been duly authorized by all
necessary corporate action on the part of the Seller. The Agreement has been
duly executed and delivered by the Seller and, assuming due authorization,
execution and delivery by Purchaser and prior satisfaction of all conditions
to the obligations of each of the parties under the Agreement (or a valid
waiver thereof by such parties, as applicable), the Agreement constitutes the
legal, valid, and binding obligation of the Seller enforceable in accordance
with its terms subject only to the exceptions set forth below, and Seller has
all power, authority and right to perform and observe the terms and
conditions of such instruments.
(3) The execution and delivery of the Agreement by the Seller does not,
and the performance of the Agreement by the Seller will not, (a) result in a
breach of or violate the Charter or By-laws of the Seller, (b) violate (A)
any statute, law, rule or regulation, or (B) to the best of my knowledge, any
order, judgment, award, administrative interpretation, injunction, writ, or
decree or the like of any court or government authority, or (C) to the best
of my knowledge, conflict with or violate any agreement, permit concession,
grant, franchise, license, or other governmental authorization or
approval necessary for the purchase by the Seller of the Loans, the
effect of which breach, conflict or violation would be material and
adverse to the rights of the Purchaser under the Agreement or to the
Loans. No regulatory approvals or consents are required under
Massachusetts or federal law or regulation with respect to Seller's
consummation of the transactions between Purchaser and Seller contemplated
by the Agreement.
(4) To the best of my knowledge, there are no actions, suits,
proceedings, or governmental investigations or inquiries pending or
threatened against the Seller seeking to prevent or that, if successful,
would prevent the consummation of the transactions contemplated by the
Agreement.
(5) With respect to each Loan, the transfer, endorsements, and delivery
of each Note upon receipt of adequate consideration in the Purchase Price by
the Seller pursuant to and as provided in the Agreement is sufficient to
constitute the Purchaser the holder of each Note and the beneficiary under
the related Mortgage, assuming that the foregoing instruments are properly
executed by the respective parties thereto; provided that I express no
opinion (a) as to whether the Notes are negotiable instruments or whether
such transfer will constitute the Purchaser a holder in due course of each
Note within the meaning of the Uniform Commercial Code as in effect in the
state in which it was made, or (b) as to whether the assignment of the
related Mortgage is in recordable form.
The opinion set forth in the last sentence of paragraph (2) above to the
effect that the Agreement is enforceable against Seller in accordance with
its terms, is subject to the following exceptions:
a. Such enforceability may be limited by bankruptcy, insolvency,
receivership, conservatorship, reorganization or other similar laws now or
hereafter in effect relating to or affecting creditor's rights.
b. Such enforceability may be limited by general equitable principles,
including, without limitation, concepts of materiality, reasonableness, good
faith and fair dealing, and the possible unavailability of specific
performance or injunctive relief, regardless of whether such enforceability
is considered in a proceeding in equity or at law.
I hereby advise your that the opinions expressed herein are limited to
matters of federal law and the law of the Commonwealth of Massachusetts and
do not purport to cover any matters as to which any laws of any other
jurisdiction are applicable. Insofar as the opinions expressed herein are
limited to transactions between the Seller and the Purchaser, except for the
opinion I express in paragraph (5) above, I express no opinion regarding any
transaction(s) between Seller or Purchaser and any Obligor(s) evidenced by
loan applications, Notes, Mortgages, disclosures, notices or any other
instrument or documents entered into or exchanged between the Seller or
Purchaser and the Obligor(s). I am not assuming any obligation to
revise or supplement the opinions expressed above should such laws be
changed by legislative action, judicial decision, or otherwise.
This opinion is rendered to you as the Purchaser named in the Agreement
solely in connection with the transactions contemplated therein and may not
be used or relied upon by any other person or for any other purpose without
our express prior written consent.
Respectfully submitted,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Deputy General Counsel
EXHIBIT J
FORM OF OPINION OF PURCHASER'S COUNSEL
_____________ ___, 199__
Boston Safe Deposit and Trust Company
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear Ladies and Gentlemen:
I am counsel for ( ) (the "Purchaser"), in connection with the sale
(the "Sale") by Boston Safe Deposit and Trust Company ("Seller") of a
portfolio of loans secured by residential real estate and shares of
cooperative associations (the "Loans") to Purchaser pursuant to a Mortgage
Loan Sale, Warranties and Servicing Agreement dated as of _________________
___, _____, by and between the Seller and the Purchaser. Capitalized terms
used but not defined herein have the meanings ascribed to them in the
Agreement.
In connection with rendering this opinion, I have examined originals, or
copies identified to my satisfaction as being true copies of originals, of
the following, among other things:
(a) the Agreement and all exhibits and schedules thereto; and
(b) the Charter and By-laws of the Purchaser.
For the purposes of the opinions expressed below, I have assumed (i) the
genuineness of all signatures on original documents or instruments; (ii) the
authenticity of all documents or instruments submitted to me as originals,
(iii) the conformity to originals of all documents or instruments submitted
to me as copies; (iv) the due authorization, execution and delivery of all
documents where due authorization, execution and delivery are requisite to
the effectiveness thereof (other than the authorization, execution and
delivery by the Purchaser of the Agreement, as to which my opinions are
expressed below); (v) that, immediately prior to the transfer of any Loan to
the Purchaser pursuant to the Agreement, with respect to such Loan, (A) the
Seller was the holder and named payee of the Note, (B) the Seller was the
mortgagee or beneficiary, as applicable, under each related Security
Instrument, and (C) the Seller was the owner of such Loan free and clear of
any and all liens, claims, encumbrances, participation interests, equities,
pledges, charges, security or other interests of any nature; (vi) that each
Note corresponding to each Loan has been endorsed by the Seller using the
form of endorsement attached hereto and each Note so endorsed has been
delivered to the Purchaser on or before the date hereof; (vii) that the
Purchaser is acquiring the Loans in good faith for value without notice
that they are overdue or have been dishonored or of any defense against
or claim to the Loans or any interest therein on the part of any person;
(viii) that there is no evidence on any of the Loan Documents of any
interest contrary to the Seller's interests under the Agreement; (ix)
that the Purchaser is solvent and will not be rendered insolvent by the
purchase of the portfolio of Loans, and (x) that the Seller has received
payment of reasonably equivalent value for the Loans. I have no
actual knowledge that any of the foregoing assumptions is incorrect. I
also have relied to the extent I deem proper upon written statements
and certificates of public officials and, as to various matters of fact
relevant to the opinions expressed herein, I have relied upon
certificates and statements of officers of the Purchaser.
On the basis of the foregoing examination, statements and assumptions
and in reliance thereon and upon consideration of applicable law, I am of the
opinion that:
(1) The Purchaser is a ( ), duly organized, validly existing, and in
good standing under the laws of ( ).
(2) The Purchaser has the requisite corporate power to execute and
deliver the Agreement and to consummate the transactions contemplated
thereby. The execution and delivery of the Agreement by the Purchaser and
the consummation of the transactions contemplated thereby have been duly
authorized by all necessary corporate action on the part of the Purchaser.
The Agreement has been duly executed and delivered by the Purchaser and,
assuming due authorization, execution and delivery by Seller and prior
satisfaction of all conditions to the obligations of each of the parties
under the Agreement (or a valid waiver thereof by such parties, as
applicable), the Agreement constitutes the legal, valid, and binding
obligation of the Purchaser enforceable in accordance with its terms subject
only to the exceptions set forth below.
(3) The execution and delivery of the Agreement by the Purchaser does
not, and the performance of the Agreement by the Purchaser will not, (a)
result in a breach of or violate the Charter or By-laws of the Purchaser.
The opinion set forth in the last sentence of paragraph (2) above to the
effect that the Agreement is enforceable against Purchaser in accordance with
its terms, is subject to the following exceptions:
a. Such enforceability may be limited by bankruptcy, insolvency,
receivership, conservatorship, reorganization or other similar laws now or
hereafter in effect relating to or affecting creditor's rights.
b. Such enforceability may be limited by general equitable principles,
including, without limitation, concepts of materiality, reasonableness, good
faith and fair dealing, and the
possible unavailability of specific performance or injunctive relief,
regardless of whether such enforceability is considered in a proceeding in
equity or at law.
I hereby advise your that the opinions expressed herein are limited to
matters of federal and ( ) law and do not purport to cover any matters as to
which any laws of any other jurisdiction are applicable. Insofar as the
opinions expressed herein are limited to transactions between the Seller and
the Purchaser, I express no opinion regarding any transaction(s) between
Seller or Purchaser and any Obligor(s) evidenced by loan applications, Notes,
Mortgages, disclosures, notices or any other instrument or documents entered
into or exchanged between the Seller or Purchaser and the Obligor(s). I am
not assuming any obligation to revise or supplement the opinions expressed
above should such laws be changed by legislative action, judicial decision,
or otherwise.
This opinion is rendered to you as the Seller named in the Agreement
solely in connection with the transactions contemplated therein and may not
be used or relied upon by any other person or for any other purpose without
our express prior written consent.
Respectfully submitted,
EXHIBIT K
ADDITIONAL PLEDGED COLLATERAL
CUSTODIAL AGREEMENT
THIS ADDITIONAL PLEDGED COLLATERAL CUSTODIAL AGREEMENT, dated as of
January 1, 1997, is by and between ▇▇▇▇▇▇ Capital, A Division of ▇▇▇▇▇▇
Brothers Holdings Inc., (the "Purchaser") and Boston Safe Deposit and Trust
Company, a Massachusetts trust company with its principal place of business
at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Custodian");
WITNESSETH
WHEREAS, pursuant to the terms of a Mortgage Loan Sale, Warranties and
Servicing Agreement of even date herewith (the "Loan Sale Agreement"), the
Purchaser has agreed to purchase certain loans (each a "Mortgage Loan") from
the Company as whole loans; and
WHEREAS, the Mortgage Loans will be transferred to the Trust established
under the Trust Agreement; and
WHEREAS, the Purchaser and the Company have agreed that the Purchaser
will assign all of its rights and delegate all of its obligations hereunder
to the Depositor, which in turn will assign all of its rights and delegate
all of its obligations hereunder to the Trustee under the Trust Agreement,
and that each reference herein to the Purchaser is intended, unless otherwise
specified, to mean ▇▇▇▇▇▇ Capital or the Trustee, as assignee, whichever is
the holder of the Mortgage Loans from time to time; and
WHEREAS, certain Mortgage Loans are secured by Additional Collateral (as
defined in the Loan Sale Agreement); and
WHEREAS, the Purchaser desires to have the Custodian retain possession
of the Additional Collateral for the benefit of the Purchaser and any future
purchaser, in accordance with the terms and conditions hereof;
NOW, THEREFORE, in consideration of the mutual undertakings herein
expressed the parties hereto hereby agree as follows:
Section 1. Definitions.
-----------
Capitalized terms shall have the meanings assigned to them, except that
capitalized terms used and not defined herein shall have the meanings
assigned to such terms in the Loan Sale Agreement.
Agreement: This Custodial Agreement and all amendments and attachments
---------
hereto and supplements hereof.
Custodian: Boston Safe Deposit and Trust Company or any successor in
---------
interest or assigns, or any successor to the Custodian under this Agreement
as herein provided.
Purchaser: ▇▇▇▇▇▇ Capital, A Division of ▇▇▇▇▇▇ Brothers Holdings Inc.,
---------
or its successor in interest or assigns.
Section 2. Appointment of Custodian.
------------------------
The Purchaser hereby appoints and designates the Custodian as the
custodian of the Additional Collateral. The Custodian hereby accepts such
appointment and designation and agrees that it shall maintain custody of the
Additional Collateral in accordance with this Agreement. With the prior
approval of the Purchaser, the Custodian is permitted to engage sub-
contractors to assist in providing certain of the services to Purchaser under
this Agreement.
Section 3. Obligations of the Custodian.
----------------------------
The Custodian shall hold all Additional Collateral for the exclusive
benefit of the Purchaser, and shall make disposition thereof in accordance
with this Agreement and the instructions furnished by the Purchaser. The
Custodian shall segregate and maintain continuous custody of all Additional
Collateral in accordance with customary standards for such custody.
Section 4. Custodian Duties.
----------------
As Custodian for the Additional Collateral, Custodian shall:
(a) hold the Additional Collateral, as applicable, in safekeeping
facilities, including, without limitation, in central depositories
including the Depository Trust Company, in Book Entry System of the U.S.
Treasury Department ("Fed Book Entry"), or in the safekeeping of other
custodian banks, clearing corporations and depositories or similar
organizations in the United States or elsewhere, as required for the
secure and efficient handling of the property and as Custodian in its
sole discretion shall select;
(b) collect all income earned by, and all distributions due to,
the Additional Collateral, if any;
(c) collect all proceeds from securities, certificates of deposit
or other investments which may mature or be called;
(d) attend to exchanges of securities, to deposits or exchanges of
the securities of companies in reorganization, and to other so-called
corporate actions which affect the Additional Collateral as directed by
the Purchaser; and
(e) upon the Purchaser's written instructions, deliver to any
person, agent, financial institution, partnership, corporation or other
designated recipient any or all of the Additional Collateral held under
this Agreement.
The Custodian shall have no duty or responsibility to manage or
recommend investments of the assets held by it hereunder or to initiate any
purchase, sale or other investment transaction in the absence of proper
instructions (as set forth in Section 5 below).
Section 5. Directions and Instructions.
---------------------------
All directions to Custodian from the Purchaser shall be in writing
(provided that Custodian may, in its discretion, accept oral directions
subject to confirmation in writing), and Custodian shall be fully protected
in acting in accordance therewith or for failing to act in the absence
thereof. The Purchaser shall certify to Custodian the names and specimen
signatures of persons authorized to act for the Purchaser in relation to
Custodian. Communications to Custodian shall be sent to its offices at ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or to such other address as
Custodian shall specify, and such communications shall be binding upon
Custodian when received by it.
Notwithstanding anything herein to the contrary, Custodian shall be
fully protected in acting in accordance with directions with respect to
securities transactions (including without limitation the affirmation and/or
confirmation of such transactions) received by it through a system or
arrangement for the coordination of securities transaction settlements
operated by Depository Trust Company or by any central securities depository,
securities clearing organization or book entry system which serves to link
investment managers, securities brokers and custodian banks, pursuant to an
agreement entered into by Custodian and the Purchaser to the same extent as
if the directions were in writing.
Section 6. Without Express Authority.
-------------------------
The Custodian may, in its discretion and without express authority from
the Purchaser attend to all non-discretionary details in connection with the
sale, exchange, substitution, purchase, transfer and other dealings with the
Additional Collateral of the Purchaser except as otherwise provided by proper
instructions.
Section 7. Standard of Care.
----------------
The duties of Custodian shall only be those specifically undertaken
pursuant to this Agreement, and Custodian shall not be liable for an act or
omission of another person in carrying out any responsibility imposed
upon such person with respect to the Additional Pledged Collateral held under
this Agreement whether such responsibility is allocated to such other person
by this Agreement or pursuant to a procedure established in this Agreement or
otherwise. In performing its duties under this Agreement, Custodian shall
exercise the same care and diligence that it would devote to its own
property and shall be liable only for losses arising from its negligence or
willful misconduct.
Section 8. Compensation of Custodian.
-------------------------
Throughout the Term of this Agreement, as set forth in Section 14 below,
the Custodian shall perform its duties hereunder without compensation.
Section 9. Examination of Custodial Files.
------------------------------
Upon reasonable prior notice to the Custodian, the Purchaser and its
agents, accounts, attorneys and auditors will be permitted during normal
business hours to examine the records relating to Additional Collateral in
the possession of or under the control of the Custodian relating to any or
all of the Mortgage Loans.
Section 10. Removal of Custodian.
--------------------
Upon at least 45 days' prior written notice to the Custodian, the
Purchaser may remove and discharge the Custodian from the performance of its
duties under this Agreement. Any termination by the Purchaser shall be
accompanied or followed promptly by proper instructions in writing setting
forth the names of the persons to whom the Custodian shall deliver the
Additional Pledged Collateral. The Custodian will deliver promptly the
Additional Collateral to the persons so specified. The Purchaser shall be
responsible for the fees of any successor Custodian.
Section 11. Termination by Custodian.
------------------------
The Custodian may terminate its obligations under this Agreement upon at
least 45 days' prior written notice to the Purchaser. In the event of such
termination, the Purchaser may, in its discretion, appoint a successor
Custodian. The payment of any successor Custodian's fees and expenses shall
be solely the responsibility of the Company or any successor to the Company
as servicer pursuant to the Loan Sale Agreement. If notice of termination
is given by the Custodian, the Purchaser shall, within 30 days following the
giving of such notice, deliver to the Custodian proper instructions in
writing specifying the names of the persons to whom the Custodian shall
deliver the Additional Collateral held by it. The Custodian will deliver
promptly the Additional Pledged Collateral to the persons so specified.
If within 30 days following the giving of a notice of termination by the
Custodian, the Custodian does not receive from the Purchaser proper
instructions in writing specifying the names of the persons to whom the
Custodian shall deliver the assets of the Purchaser held by it, the
Custodian, at its election, may deliver the Additional Collateral to the
Purchaser.
Section 12. Survival.
--------
The obligations of the parties hereto regarding the use of reasonable
care, indemnities and payment of fees and expenses shall survive the
termination of this Agreement.
Section 13. Term of Agreement.
------------------
Unless terminated pursuant to Section 10 or Section 11 hereof, this
Agreement shall terminate upon the earlier of (1) the resignation or removal
of the Custodian, its agent or affiliate as the servicer under the Loan Sale
Agreement, and (2) the final payment or other liquidation (or advance with
respect thereto) of the last Mortgage Loan or the disposition of all property
acquired upon foreclosure or deed in lieu of foreclosure of any Mortgage
Loan, and the final remittance of all funds due the Purchaser under the Loan
Sale Agreement. In such event, all Additional Collateral shall be released
in accordance with the written instructions of the Purchaser.
Section 14. Notices.
--------
Except as otherwise specified herein, each notice or other communication
hereunder shall be in writing and shall be delivered to the intended
recipient at the following address (or at such other address as the intended
recipient shall have specified in a written notice given to the other parties
hereto):
if to the Purchaser:
--------------------
▇▇▇▇▇▇ Capital
c/▇ ▇▇▇▇▇▇ Brothers Holding , Inc.
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
if to the Custodian:
-------------------
Boston Safe Deposit and Trust Company
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
Section 15. Amendments.
----------
Unless otherwise specifically provided herein, this Agreement may not be
amended, modified, altered or supplemented other than by means of an
agreement or instrument executed on behalf of each of the parties hereto.
Section 16. Waiver.
------
No failure on the part of any person to exercise any power, right,
privilege or remedy hereunder, and no delay on the part of any person in the
exercise of any power, right, privilege or remedy hereunder, shall operate as
a waiver thereof; and no single or partial exercise of any such power, right,
privilege or remedy shall preclude any other or further exercise thereof or
of any other power, right, privilege or remedy.
Section 17. Severability.
-----------
In the event that any provision of this Agreement, or the application of
any such provision to any person or set of circumstances, shall be determined
to be invalid, unlawful, void or unenforceable to any extent, the remainder
of this Agreement, and the application of such provision to persons or
circumstances other than those as to which it is determined to be invalid,
unlawful, void or unenforceable, shall not be impaired or otherwise affected
and shall continue to be valid and enforceable to the fullest extent
permitted by law.
Section 18. Successor and Assigns.
---------------------
This agreement shall inure to the benefit of the successors and assigns
of the parties hereto.
Section 19. Governing Law.
-------------
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO
CONFLICT OF LAWS PRINCIPLES APPLIED IN SUCH STATE.
Section 20. Counterparts.
------------
This Agreement may be executed in counterparts, each of which shall
constitute an original and both of which, when taken together, shall
constitute one agreement.
IN WITNESS WHEREOF, the Purchaser and the Custodian have caused their
names to be signed hereto by their respective duly-authorized officers, all
as of the date first above written.
▇▇▇▇▇▇ CAPITAL, A DIVISION OF
BROTHERS HOLDINGS INC., as Purchaser
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
BOSTON SAFE DEPOSIT AND TRUST COMPANY, as Custodian
By:
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
EXHIBIT L
INTENTIONALLY OMITTED
EXHIBIT M
FORM OF CERTIFICATE FOR NONRECOVERABLE ADVANCES
__________________ ____, 199__
(To be addressed to the Purchaser)
Re: Mortgage Loan Sale, Warranties and Servicing Agreement dated as of
January 1, 1997 between ▇▇▇▇▇▇ Capital, A Division of ▇▇▇▇▇▇ Brothers
Holdings Inc., as Purchaser, and Boston Safe Deposit and Trust Company, as
Company.
Ladies and Gentlemen:
In accordance with the provisions of Sections 4.02 and 5.03 of the
above-referenced Agreement, the undersigned hereby certifies that it has
determined, with regard to the Mortgage Loan(s) identified below, that future
advances constitute Nonrecoverable Advances as such term is defined by the
Agreement.
____________________________________ ________________________
Mortgagor Identifying Number
____________________________________ ________________________
Mortgagor Identifying Number
____________________________________ ________________________
Mortgagor Identifying Number
BOSTON SAFE DEPOSIT AND TRUST COMPANY
By:
----------------------
Name:
--------------------
Title:
-------------------
EXHIBIT N
---------
(LIST OF NONMATERIAL MODIFICATIONS)
1. Transfer of title to the Mortgaged Property to an entity in which the
borrower has a beneficial interest which does not affect the validity
or priority of the lien on the Mortgaged Property.
2. The addition of a spouse on the title to the Mortgaged Property.
3. The deletion of a spouse or co-borrower from the title to the Mortgaged
Property and from the Mortgage Loan Note, provided the remaining
obligors under the Mortgage Loan Note satisfy the Servicer's
underwriting requirements.
4. Release of real property or Additional Collateral provided the LTV after
the release of collateral shall not exceed 90%.
5. Substitution of new Additional Collateral for existing Additional
Collateral.